Belgium’s startup ecosystem is grappling with a significant investment downturn, reaching its lowest levels since 2019.
The latest data compiled by L’Echo reveals that Belgian startups secured a total of €770 million in funding in 2023, marking a sharp decline from the previous year’s record of €1.52 billion.
This trend mirrors a broader decline in startup investments across the European Union, which saw funding drop from €82 billion to €41 billion during the same period.
Various factors have contributed to this stark reduction in investment, with rising interest rates and a global economic slowdown taking centre stage.
L’Echo columnist Olivier Samois points to multiple challenges, including sluggish economic growth, historically high energy prices, and repeated interest rate hikes by the European Central Bank (ECB) over the past two years.
“Startups will not fondly remember the year 2023,” Samois noted. “Several shocks have marked the year: the aftermath of the conflict that is still raging in Ukraine and its impact on energy markets; growth that remains sluggish; and above all, the terrible impact of the rise in rates, which may have reached their peak in recent months.”
Renaat Berckmoes, CEO of software venture capital firm Fornino, echoed Samois’s sentiments, emphasizing that the global economic slowdown has led investors to become more risk-averse, prioritizing profitability over growth.
“While the challenges are widespread, it’s important to note that not all startup sectors have struggled uniformly,” Berckmoes stated. He highlighted the resilience of biotechnological and medical technology (‘medtech’) startups, which continued to attract substantial funding despite the overall downturn.
Berckmoes emphasized that nine of the top ten capital-raising firms in the Belgian startup landscape belonged to the biotech or MedTech sector, indicating sustained investor interest. “For biotech companies, there is practically no difference compared to 2022,” he added.
In contrast, startups in the software sector faced a more challenging environment. Berckmoes explained that the software market had become binary, with only highly successful companies finding funding quickly at decent valuations. “It became all or nothing,” he noted.
The software sector’s struggles underscore the changing dynamics of investor sentiment, where a heightened focus on profitability has reshaped the funding landscape.
Startups that can demonstrate clear paths to profitability and sustainable business models find it more accessible to attract investments, while others face increased scrutiny.
As Belgium’s startup ecosystem navigates these challenges, there remains room for cautious optimism. Despite the overall decline in funding, specific sectors, particularly biotech and medtech, continue to thrive.
The ability of startups to adapt to evolving market conditions, prioritize profitability, and showcase innovative solutions will likely be crucial in attracting investor confidence amidst a challenging economic backdrop.
While 2023 poses significant hurdles for startups, resilience and strategic adaptation may pave the way for future funding and growth resurgence.
As the global economic landscape transforms, the fate of Belgian startups will depend on their ability to weather the storm and emerge stronger on the other side.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members
