As long as there’s music, there’s dancing. Considering the current mood in the German and European venture capital industry, the dance floor is only moderately crowded and the music is not party music, but rather melancholic blues. But it’s in these moments that we should pause and look at the bigger picture, because the scene can be proud of it.

There’s no question that the bare figures are sobering. According to the latest European Venture Report from data provider PitchBook, only around 4,500 financing rounds were completed in the first half of 2023, with €25.6 billion invested in European start-ups and growth companies. On a 12-month basis, the scene is roughly at the same level as in the Covid year 2020; the record figures from 2021 and 2022, when more than €100 billion of venture capital was raised in both years, would fall short by more than half.

Despite this projected halving, the European venture capital and start-up industry is a model of success, as the big picture shows. In 2003, investments amounted to only about one billion euros. If the situation does not deteriorate significantly due to external influences, we can expect a fifty-fold increase in 20 years.

This figure is even more impressive when compared to the U.S. – the land of milk and honey when it comes to venture capital investments. The projected figure of $171.3 billion in 2023 is also likely to be almost exactly the same as in 2020. Compared to 2003, however, this would only be a tenfold increase.

Although Europe’s strong performance over the past two decades has undoubtedly included catch-up effects, the region is well positioned to continue its dynamic growth. At 6.1 million, the Old Continent already has 40 percent more developers than the U.S. (4.3 million). Moreover, the proportion of graduates in fields such as technology, engineering, and mathematics (STEM) in each of the five major European economies – Germany, France, the UK, Italy, and Spain – is well above the U.S. figure of 18 percent. Germany, at 35 percent, even ranks an impressive first.

After the wild party, the music in the European venture capital scene is now a little quieter. But given the developments of the last 20 years, it is certainly allowed to turn the music up now and then. And the enormous potential of the high proportion of STEM graduates should lead to more buzz on the dance floor in the foreseeable future.