‍2023 OVERVIEW‍

First of all, a quick reminder about the sectors we are exploring within our Proptech & Contech fund: we delve into everything related to the built environment, encompassing three sectors ie Construction, Real Estate, and Energy. In 2023, while there was a slight investment slowdown compared to 2022 (€2.2B raised in 2023 vs. €3.1B in 2022), the total funds raised remained nearly equal to the 2021 level. This deceleration is not unexpected, given the challenges encountered by the European Real Estate sector this year, as highlighted in this article 2023 Real Estate Is Most Distressed Sector in Europe, Study Finds published by Bloomberg in February 2024.

The distribution of rounds indicates a significant decrease in Serie A/B rounds (€5-20M), however, early-stage rounds remained stable and even increased compared to 2022, with 299 pre-seed and seed rounds (raising less than €5M), accounting for 78% of total rounds and up from 75% in 2022.

‍NOTABLE CHANGES WITHIN THE ECOSYSTEM – TOWARDS SUSTAINABILITY AND HARDWARE

The highlight of this year is a significant increase in "sustainability" startups (ie startups with significant environmental or social objectives in their value proposal), overshadowing more "traditional" proptech investments like transactional or fintech plays, which are experiencing challenges due to the market situation. This momentum on sustainability startups can be attributed to a regulatory shift, as legislations become increasingly stringent regarding CO2e emissions in Europe. Notable examples include: The Tertiary Decree in France (reduction of 40% of CO2e emission by 2030 for tertiary assets), The German Building Energy Act (fossil fuel ban by 2045), and the Future Homes and Buildings Standard in the UK (new buildings should produce 75% less CO2e than homes delivered under previous regulations).

As a result, in 2023, 67% of the total funds raised went to startups with either environmental or social impact, with 65% specifically dedicated to environmental topics.

It therefore comes as no surprise that the Energy sector has experienced a significant increase in fundraising over the past three years: from 10% in 2021, 18% in 2022, to a substantial 38% in 2023. These Energy tech startups are addressing numerous environmental issues through innovations in materials, renewable energies, and battery storage, all of which are hardware solutions. This explains the rise in hardware investments over the last three years, with hardware solutions accounting for only 19% of total funding in 2021, increasing to 25% in 2022, and reaching 53% in 2023 (at AXC, we also believe that hardware plays have promising days ahead, feel free to check out our latest article on batteries!). 

STABLE DYNAMIC THROUGHOUT THE YEARS – GEOGRAPHIC DYNAMICS AND FEMALE FOUNDERS

In 2023, certain trends remained stable regardless of the economic situation. London continues to hold the top spot in terms of funds raised in 2022 and 2023, despite the Brexit becoming effective in 2021. Moreover, the UK & Ireland region continues to stand firm as the third most dynamic region in 2023 in terms of amounts raised within Europe, representing 21% of the total funding. It closely follows the DACH region, which secured 22% of the funding, while France gathered 33% of the total amount in Europe. France gained 9 points compared to 2022, thereby slightly surpassing the DACH region.

In terms of female-led rounds, we have noted no variation in both the amount raised and the quantity of rounds for female founders. In 2023, only 68 rounds featured women within the startup's founding team, constituting just 17.8% of the total amount raised, compared to 18.3% in 2022 and 16% in 2021.

FUNDRAISING CHAMPIONS OF 2023 – CONFIRMING THE GENERAL TRENDS OF THE YEAR

To end on a positive note, here are the top fundraisers of the year, confirming the trends discussed in this article. Among the 20 highest rounds of 2023, 14 belong to the Energy sector, including Accenta (Raised €108M : French B2B software company focused on CO2e mitigation), Mylight150 (Raised €100M : French designer of hardware solutions for renewable energies). and Gropyus (Raised €100M: Austrian company (DACH region) combining Building Operating System Software with hardware production to build sustainable real estate assets). At AXC, we also have a strong conviction on the increased connection between Energy innovation and the Built World, and will keep on supporting innovative strategies in these fields with our fund Axeleo Proptech 1 and the new funds to come!

=> Feel free to contact us if you have any comment or question on our Annual Review : https://docsend.com/view/q83zf8p9x9emcp54