2023 can be considered a period of adjustment in the technology sector, especially in venture capital, Estonian law firm Ellex Raidla said in its annual Tehinguradar (Transaction Radar) report.
The number and volume of investments has fallen significantly and the pace of transactions has slowed, but in the longer term investment in the tech sector is still on the upward trend, the law firm says.
“In Estonia, we have also seen down rounds, where the value of the company is adjusted downwards compared to previous investment rounds. To avoid such a correction, many companies have tried to raise capital through convertible loans, where the determination of the value of the company is postponed to the future,” said Antti Perli, partner at Ellex Raidla.
Last year, the focus of European technology investments was on companies addressing climate and energy issues. According to the Atomico State of European Tech 2023 report, investments made in this sector accounted for approximately 30 percent of the total investment volume. In terms of the capital raised, this sector was the most attractive, surpassing both the financial technology and software sectors.
In Estonia, the largest deal in this sector was the 108 million euro financing round for Skeleton Technologies, led by Marubeni and Siemens. This was followed by HD Hyundai’s 45 million euros strategic investment in Elcogen.
In 2024, Perli expects to see increased investment in defense technology companies. The one billion euro NATO Innovation Fund, in which the Estonian state has invested 30 million euros and which aims to finance companies developing deep technologies for civil and military use, can contribute to this, he added.
Source: BNS
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