Antler, which claims to be one of the world’s most active early-stage VC firms, has released its 2022 report. Detailing its activity in a busy year, although the report is looking backwards, the scale of Antler’s activity means that it is a good indicator of what lies ahead in the tech sector. And the news is largely good.
We took a look through Antler’s report to find the highlights.
2022 was actually a good year
2022 was seen by many as a bad year for tech startups, with layoffs dominating the news in the latter part of the year. But looking at the sector as a single entity may give a misleading picture, and examining the ecosystem more closely reveals that the situation was more complicated.
In fact, at the very beginning of the funding pipeline, activity remained remarkably resilient. Antler’s report reveals that there is a strong flow of new startups. In 2022, they backed 102 European startups, averaging €160,000 in pre-seed or seed investments. And these startups were selected from a huge 21,000 applications, an increase of 75% on the numbers made in 2021.
Magnus Grimeland, Antler’s Founder and CEO, sees a link between the contrasting news, “we are seeing a significant influx of talent as a result of the tech downturn,” and rather than pessimism, he’s optimistic. “We believe this is actually the best time to become a tech founder, and Antler is actively backing this new generation of entrepreneurs.”
The tech sector is, slowly, becoming more diverse
The tech sector is slowly becoming more diverse. As is true in almost every sector, white men are often at the top, and this runs the risk that they — unconsciously — perpetuate this lack of diversity. However, Antler is finding that the diversity in their portfolio is, gradually, increasing.
Antler is purposefully working to increase diversity within its portfolio of founders. During 2022 they worked with 1,000 founders, hailing from 90 different countries, and just shy of a third — 32% — of their European portfolio has at least one woman founder. Perhaps their most promising statistic comes from their global portfolio. Among that grouping, nearly two-thirds — 61% — of their founders identify with at least one community that is typically under-represented.
Although there is still some way to go before the sector reflects the world it serves, Antler’s performance is arguably better than most and beating the path for others to follow.
Climate change is emerging as a major startup sector
One of the most interesting trends that Antler’s report identifies is the growth of climate tech. While perhaps not a breakthrough, representing 14% of Antler’s 2022 investments in climate tech edged fintech (with 13%) into second place.
The global VC firm invests in any sector, so the breakdown of its investments can reflect the overall shape of the startup market. Fintech remains the dominant sector in several individual markets, the UK among them; the growth of climate tech illustrates not just the challenge the world faces, but the ambition of startups in tackling that.
Antler believes that it is just the start, and the enormity of the challenge will create a natural gravity that attract more startup talent. Antler’s portfolio includes climate tech innovators like Berlin’s NeoCarbon, who are using air cooling towers to extract CO2 from the atmosphere and London’s Hydrologiq, who are using hydrogen to generate electricity.
The growth of climate tech means that it now represents nearly a quarter (22%) of Antler’s European portfolio.
The past, and ambitious future
Although it is, of course, risky to draw conclusions from just one report, Antler’s scale gives it considerable authority. As well as an impressive year of investment in 2022, Antler itself has expanded. Opening in France, Spain, and Portugal over the course of the year, it is a truly European-wide investor and plans to run residencies for founders and entrepreneurs in nine European countries in 2023.
It also has an impressive track record. Its European portfolio is now worth in excess of $1 billion, an impressive feat after just three years of early-stage investing. And they predict a bright future. They are planning to increase their activity in 2023 and plan to have backed 6,000 startups by 2030.
The report, perhaps bravely, features the predictions for the forthcoming year, and beyond, from their partners. And the overall theme is positive.
Although startups will need clear paths to profitability, 2023 will see them becoming more diverse, and more focused on the challenges the world faces. It might be a tough year ahead, but with incredible talent coming through, it will also be a good one.