The European IT Industry in 2022-23 update | Bunch Consulting
The European IT sector is a growing market, with new technologies emerging every day. To be aware of what the future holds for the European IT Industry, we’ve been closely watching the software development trends as well as the companies becoming Unicorns in 2022. What you’ll also find here, is the position of Ukraine in the European Tech market, and our predictions on custom software development. Enjoy the read!
The European Tech Unicorn Club
Let’s take the unicorn by the horn together! The European unicorn herd has welcomed 31 tech companies in 2022. Is it a lot? How does it look when compared with 2021? Well, 2021 turned out to be an exceptional year, with 105 European tech companies reaching a billion-dollar valuation for the first time. 2022 reverted to the number of unicorns seen in recent years.?
Time until becoming a unicorn
This question is keeping start-up founders awake at night… How long until we become a unicorn? Let’s take a look at some numbers from the State of European Tech 2022 Report by Atomico. In 2019, 50% of new unicorns were more than 11 years old, and the average $B+ company took 13 years to reach unicorn status. In 2022, the average time to reach the $B+ was 7 years, and 50% of companies were even faster than that!
The purpose-driven unicorns herd
The level of investment in purpose-driven tech companies increased considerably over the last few years. It has resulted in a rise of European companies with purpose at their core. There are now 42 European unicorns classified as purpose-driven, almost three times more than the 15 purpose-driven companies in 2019. Now, purpose-driven unicorns account for 12% of all European unicorns.
A hotspot for Fintech and Enterprise Software
The European tech ecosystem has consistently produced companies joining the unicorn herd in Fintech and Enterprise Software. These two sectors account for 38% of all European unicorns to date. According to the State of European Tech 2022 Report by Atomico, almost half (46%) of all capital invested into Europe in 2022 flowed to Fintech and Enterprise Software companies.
‘De-horning’ the unicorns
The status of a unicorn, once reached, is not always guaranteed to hold out. This year has seen many unicorns being ‘de-horned’, which simply means their valuation has fallen back below the $1B+ threshold. 2022 has seen a decline of European tech unicorns by a net total of 14. There were 31 new unicorns but 45 unicorns de-horned during 2022, as per Atomico’s report.
European vs. US unicorns
At median, European tech unicorns valued at $1B+ today have a higher valuation compared to funding when looking at their peers, based in the US. This could be a result of European unicorns being historically underfunded and having to make do with less. That could also mean that European unicorns can extract more value from the same capital raised. The median latest valuation over total capital raised stands at 5.6x for European unicorns, ahead of their US peers with 4.9x the same multiple.
The next topic we’ll cover here is the position of Ukraine in the European Tech Sector. And yes, also their Uni- and Decacorns!
The Ukrainian Tech industry in 2022
This topic lies close to our hearts, and that’s why we’d like to share with you some data that will help you understand the changes that happened in the Ukrainian Tech Sector last year.?
The Tech Ecosystem
According to the latest mapping of the Ukrainian tech ecosystem by Dealroom, Ukraine can boast of having more than 1500 startups. What is also worth noticing, there are 600 Ukrainian-founded tech companies based outside of the country. As per Dealroom estimations, the combined enterprise value of Ukrainian tech companies amounts to almost $23B (and while this has declined in 2022 due to the global technology market changes, their overall value has grown by more than 8x since 2017.) Additionally, according to the monitoring service Opendatabot, for the first eight months of 2022, ICT exports grew by 16% year over year. Data from the National Bank of Ukraine shows that during the first nine months of 2022, the volume of Ukrainian computer services increased by 13% (to almost $5.5B).?
The Ukrainian Unicorns
Actually, let’s start with decacorns! To date, two Ukrainian unicorns have reached Decacorn status ($10B+). There are 10 companies that became Unicorns ($1B+). Some of these companies are not headquartered in Ukraine but maintain close connections with the country, both economic as well as social.
Relocation
Since the beginning of the war, 44% of startups have chosen to relocate their teams to safe destinations. According to a source survey by TechUkraine, the 56% who didn’t, are firmly set to stay in Ukraine and ensured that their teams have everything they need to work and live.
Income remains resilient
According to a survey from Lviv IT Cluster, 73% of ICT specialists say that since the beginning of the full-scale invasion, their income has increased or remained at the level of February 2022.
Tech education: Ukraine outshines on tech graduates
Ukraine’s strength in Internet and Communication Technology (ICT) careers doesn’t come out of nowhere. The Ukrainian education system delivers 43% more ICT graduates than Poland, a stunning 70% more than the UK, and 53% more than France. International tech companies notice that the pool of talented and educated Ukrainian graduates is constantly growing. And they hire more than ever!
The Ukrainian tech ecosystem has demonstrated incredible resilience, and what’s more – growth in the face of war. We’re proud and happy to share with you the data and figures in this article because they show our attitude toward work and life. If you have any questions – not only about your projects but also about the way we work, drop us an email at [email protected].
Custom software 2023 development trends
It’s not a secret that the custom software development industry is rapidly growing. There are many reasons for this, but one of the biggest is that companies realize how much money can be saved by having their own bespoke software developed. But as demand increases, so does competition. And as any expert will tell you, the key to success in any industry is knowing your audience and providing them with what they want. Here are the 3 trends we consider worth watching in 2023:
The Internet of Behaviour (IoB)
We’re sure you’re familiar with the Internet of Things (IoT). But have you heard of the Internet of Behaviour (IoB)? For us, it’s one of the most exciting software development trends! IoB aims to connect physical objects with the Internet, and therefore interact with devices in a more natural way. Artificial intelligence and machine learning help us to gather data about how we behave. This way, we can improve our interactions with devices, and create new types of services and products that resonate with human behavior and are more adaptable than ever before.
Microservices architecture
We’re adding this trend to our list because it helps businesses to achieve greater efficiency and scalability. It allows developers to break down their apps into modular services that are easy to deploy and manage. Running each service separately has many benefits, starting with improved scalability, fault tolerance (if one service fails, it will not take down the entire application), and improved performance.
Increase in AI adoption
Implementing AI helps businesses lower operational costs not only by automating routine processes but also by minimizing errors. Experienced professionals can concentrate on projects with higher value, requiring their expertise. AI is expected to bring $1 trillion in value annually to the banking sector alone. However, the industry that will benefit the most from AI software in the upcoming year is the healthcare sector. According to a poll conducted in March 2021, nearly 90% of hospitals plan to implement AI in their systems.
The software development practices in 2023
The software development market is expected to reach a total of $700 billion by 2026. The increasing number of apps and services makes it difficult for businesses to track even the most popular ones and analyze their strengths and weaknesses. How to grow your business so your app or service stands out from the crowd? We’ve prepared a couple of trends for you to keep up with.
The Web3
Allowing users of your product to control their data and providing a more interactive experience is one of the essential factors contributing to success. The rise of Web3 is expected to revolutionize the way software development is done. Thanks to decentralization you can remove intermediaries and benefit end users. It also helps social media platforms forget about data breaches.?
The Internet of Things (IoT)
As technology continues to expand, connected devices are becoming an integral part of our lives. It’s estimated that over 250 billion devices will be online by 2023. IoT will impact various industries, such as automotive and manufacturing, significantly. Additionally, many gadgets, sensors, and devices are connected to the internet and collect data to help us in everyday life.?
Cloud Services
The flexibility and cost-effectiveness of cloud computing are driving the demand for software development services in the next few years. That’s why on-premise solutions are becoming less popular. Cloud services offer unlimited space to store company data, and they also provide the necessary protection against hackers.
The demand for cybersecurity
With businesses and individuals increasingly relying on technology, the demand for cybersecurity is on the rise. Determining the security of systems and assessing their vulnerabilities is possible thanks to biometry. That’s why companies should regularly update their patch software. On the other hand, everyone of us owns a computer, a smartphone, or wearables that need to be protected from hackers.
Purpose-driven tech fuelling the growth 2023 European?
Renewable energy, space exploration, Web3, precision medicine, and quantum computing are undoubtedly the technologies of the future. But it’s the PURPOSE behind them that matters the most. According to Atomico’s “State of the European Tech 22” report, Europe generates more than 50% of early-stage investments in purpose-driven companies globally. But what does “purpose-driven” tech even mean?
The importance of social impact
Each technology can be good or bad, depending on how it’s used. The purpose-driven approach puts pressing global issues just next to commercial success, so it’s not all about the money anymore. More and more Europe-based start-up founders choose to tackle the issues with their tech for a positive social impact.
Tech vs. non-tech sectors in Europe
Still not convinced about the importance of the trend? That’s alright, we’ve got you covered Atomico provides some eye-opening data:
“Tech is only increasing in importance to Europe’s economic growth, as the relative contribution of tech continues to outpace other sectors and accelerate ahead. While the tech sector has outgrown non-tech sectors by a factor of two over the trailing 10-year period, tech’s growth advantage versus the rest of the European economy has widened to 3.4x in the past three years.”
Purpose-driven investments
In Europe, which accounts for 51% of the purpose-driven investments worldwide, tech companies have raised a cumulative amount of more than $54 billion (!!!) since the start of 2018 and the upward trend is only growing. To put things in perspective, similar investments in North America and Asia decreased by ca. 50% and 65% in 2022 compared to last year, respectively.
The mission
There’s an old Anglosaxon saying “where there’s muck, there’s brass”. As true as it still is, let’s update it for 2023 and say “where there’s purpose, there’s money”. At Bunch, we always say that running a successful tech company doesn’t start with thinking “cash”. Fortunately, European investors understand that and choose to support responsible long-term projects.
We can be only happy to see this trend and we’re always there to facilitate your idea on the development and project management side.
Summary
Europe is on the right path in terms of innovation, and many exciting new apps and services are being developed for consumers. From the way data is used to cybersecurity, there will likely be many more exciting changes on the Tech horizon in the coming years.
We hope the trends we’ve picked up will help you make some great decisions about the future of your business – and we can't wait to see what you come up with!
We’ll surely keep an eye on the customization of software development trends in 2023 and are here for you if you need advice on which path to follow with your product. Our Bunch is ready to help ambitious entrepreneurs develop their tech products! Drop us an email with a short description of your idea or project at [email protected]. Let’s schedule a meeting and plan the development of your product together!