Following Technology’s Global Winter, a European Spring beckons


The massive, decade-long growth and outperformance of the global technology sector has ground to an abrupt halt.

US tech companies announced over 160,000 job losses last year, a 13-fold increase, as they reversed their pandemic hiring spree – with some smaller companies and start-ups cutting 50% of their workforce or more (1)

In China, meanwhile, the attack on private technology firms under the banner of Beijing’s ‘common prosperity’ policy has badly dented the profits and prospects of the likes of Alibaba and Tencent, while certain sub-sectors, such as online education, may never recover. 

Valuations are down everywhere, hit by higher interest rates and their impact on future cash flows. As a result, IPO volumes have plunged and private funding rounds from venture capitalists and growth funds have slowed. Growth projections are being lowered and investors are wondering when the sector will reach a new equilibrium.

Advantage Europe

“Rather than focusing on the traditional names, we are seeing investors switch attention to Europe, where there are many tech companies with the potential to emerge as future champions”, says Luis Vaz Pinto, Head of Equity Capital Markets at Societe Generale, “These companies have key contributions to make to the world’s digital and green transition and they have the ability to attain global scale.”

These technology companies will benefit from the European Union’s skill and experience in building comprehensive ecosystems, founded on well-coordinated regulations, incentives and government support at the EU, state and local level – and across the public and private sectors. One example is the Euronext Tech Leaders initiative, of which Societe Generale is a partner, with Europe’s leading stock exchange creating a special tech segment to highlight the attractions of the continent’s leading tech companies to international investors.

A second area of strength is Europe’s early and deep commitment to decarbonizing. “The green economy is intersecting more and more with the technology sector as net zero technologies like hydrogen and carbon capture start to scale,” notes Alain Bokobza, Head of Global Asset Allocation at Societe Generale. And most observers agree that Europe is both setting the standards of and developing the financial tools for funding this new industry – one in which many young, ethically-minded people want to work.

Add history, culture, an attractive environment and a more balanced lifestyle and it is no surprise that a growing proportion of the tech talent that left Europe for California, Hong Kong or even Shenzhen is starting to return – particularly given the current downturn. 

A focus on French Tech

Within Europe, the rise of the French technology industry has been remarkable, building on the energy of French entrepreneurs and the support of all stakeholders, including financing partners and public authorities, all creating a positive momentum and a top-tier ecosystem. Almost 30 unicorns have emerged in France, across the software, FinTech, GreenTech, DeepTech, consumer and marketplace segments.

Funding rounds seem to have been more resilient in France, with capital raising increasing in 2022 compared to 2021, with a record €13.5 billion of fresh capital despite macro headwinds, making France the only major European ecosystem seeing a funding increase last year. 

European capital markets have demonstrated over the last few years their readiness to welcome these new joiners, reaching out to all types of investors. Public authorities in Europe are also very supportive, with the European scale-up initiative which will strengthen the cornerstone investor base, combining public and private money. The French government, meanwhile, has set a goal for 10 unicorns go public by 2025 on the Euronext Paris Stock Exchange. 

Preparing for the thaw

Embarking on an IPO requires not only the appropriate technical preparations but also the adoption of the mindset of a future listed company. The capital market slowdown should be taken as an opportunity for these companies to engage in this journey.  

At Societe Generale we are developing dedicated coverage of tech companies and actively contributing to the tech education of the investor base, says Mr Vaz Pinto

Maintaining an early dialogue with investors is key to preparing for an IPO, for developing the equity story and maximize investor outreach. “Our inaugural French Tech conference in January 2023 allowed entrepreneurs and equity investors to engage in these early discussions, to get ready for when the thaw comes”, he adds. 

And with the recently announced joint venture project between Societe Generale and Alliance Bernstein to form a global leader in cash equities and research,

We are determined to provide our clients with the ultimate experience and in-depth analysis to capture developments in many different sectors as well as in tech, concludes Mr Bokobza. That applies, in particular, to a European tech sector with very sunny prospects.



photo van pinto


photo bokobza