The value of Europe's technology industry has shrunk by $400 billion this year, and venture capital funding is down 18%. That's according to a report from venture capital firm Atomico.

The combined value of public and private technology companies in Europe fell to $2.7 trillion, down from $3.1 trillion at the end of 2021. High interest rates, a war in Ukraine and a shrinking talent pool were among the reasons for the drop, Reuters reported.

Market pressure has forced a number of Europe's best-known companies to raise funds at a discount from their once exorbitant valuations. For example, Swedish payments company Klarna Bank AB raised $800 million at a valuation of $6.7 billion, down 85 percent from its 2021 price of $46 billion.

Venture capital financing in Europe has fallen to $85 billion in a year, according to data collected from 41 countries, an 18 percent drop from the $100 billion raised in 2021.

The number of new unicorns - firms worth $1 billion or more - also fell this year, from 105 to 31 in 2022.

Despite these challenges, Atomico found that industry insiders remain enthusiastic. In a survey of founders and investors on the continent, 77% said they were as enthusiastic or even more enthusiastic about the future of the European tech industry than they were in 2021.