Venture capital funding for European technology startups is down $1.5 billion (£1.1 billion), according to research firm Pitchbook.
The research shows that funding fell from $4.3 billion (£3.2 billion) in the second quarter of 2015 to $2.8 billion (£2.1 billion) in the three months that ended last week.
Despite the EU referendum, UK startups received by far the most funding in Europe in the most recent quarter, taking $994 million (£748 million) of the overall $2.8 billion (£2.1 billion).
London Startups like fashion website Thread and children’s book producer Lost My Name raised £4 million and €4 million (£3.4 million) respectively during the most recent quarter, while many other companies raised similar sums.
However, the UK’s decision to leave the EU may have contributed to the decline in investment across the continent, according to Malcolm Moss, founding partner at UK and US based venture capital firm Beringea.
“The uncertainty triggered by Brexit has certainly inhibited investment,” said Moss in a statement. “However, there is still a massive amount of capital looking for a home. In some ways it is a good time to invest as valuations are coming down and we can source good deal flow.”
Christian Miele, vice president of venture capital firm e.ventures, added: “The slowdown in venture funding in Q2 of this year demonstrates the direction that European VC will be taking throughout 2016. Clearly VCs were keen to only back the startups they perceived as being the most robust and filled with the most potential, an about-turn from the free-flowing investment seen in 2015.”
Worldwide, venture capitalists invested a total of $40 billion (£30 billion) during the last quarter, up 20% on the same quarter last year. However, this is skewed by a number of exceptionally large rounds including Uber’s $3.5 billion (£2.6 billion) investment from Saudi Arabia’s sovereign wealth fund.
The number of companies receiving VC funding worldwide fell 47% as investors start focusing larger investments on a select few companies.
Funding for later stage technology companies fell from $2.8 billion (£2.1 billion) in the second quarter of 2015 to $1.2 billion (£903 million) in the quarter just ended but funding for early stage tech companies increased slightly from $351 million (£264 million) to $398 million (£299 million) over the same time period.