Investments in Belgian startups have fallen to their lowest levels since 2019 as rising interest rates coupled with a global economic slowdown have made investors increasingly risk-averse.
According to data compiled by L'Echo, Belgium-based startups raised a total of €770 million in 2023 – roughly half of the record €1.52 billion raised over the course of the previous year. Startup investments across the EU also fell by a similar proportion over the same period, from €82 billion to €41 billion.
L'Echo columnist Olivier Samois attributed the steep decline to multiple factors, including "sluggish" growth, historically high energy prices, and repeated interest rate hikes over the past two years by the European Central Bank (ECB).
"The year 2023 will not be fondly remembered by startups," Samois wrote. "The year has been marked by several shocks: 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."
Samois's remarks were echoed by Renaat Berckmoes, CEO of software venture capital firm Fornino, who added that the global economic slowdown has led "investors to become more picky and focus more on profitability rather than growth".
Room for cautious optimism?
Berckmoes stressed that not all startup companies have struggled to attract investors over the past year. In particular, he noted that biotechnological and medical technology ('medtech') startups enjoyed yet another solid year of funding, with nine out of the top ten capital-raising firms being in the biotech or medtech sector.
"For biotech companies, there is practically no difference compared to 2022," he said.
By contrast, startups in the software sector experienced a far more difficult year. "[For software companies] it's a different story," Berckmoes said. "The market has become binary. Only successful [software] companies still find money easily, at decent valuations. It became all or nothing."
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Nevertheless, Berckmoes said that he remained "cautiously optimistic" about Belgian startups' near-term prospects, adding that he expected a "revival of activity" next year as "the [investment] machine is picking up a little".
Samois concurred. "The fall in investments is obviously not good news for anyone, but there is no sign that this situation will continue," he wrote. "The characteristic of a promising startup is precisely to consider obstacles as stepping stones towards a better future and to transform them into bargains."
