The combined value of public and private tech firms in Europe fell to $2.7 trillion from $3.1 trillion in late 2021, according to a report from venture capital firm Atomico.
The European tech industry has also faced an 18 percent decline in venture capital funding.
High interest rates, the war in Ukraine, and a shrinking talent pool were among the reasons cited for the drop.
Market pressures forced a number of European companies to raise funds at a discount to their once sky-high valuations. For example, Swedish payments firm Klarna Bank raised $800 million at a valuation of $6.7 billion, an 85 percent drop from its 2021 price tag of $46 billion.
Venture capital funding in Europe was down to $85 billion for the year, based on data collected across 41 countries, an 18 percent decline from the $100 billion raised in 2021.
The number of new unicorns – firms valued at $1 billion or more – also fell this year, down from 105 to 31 in 2022.