Venture capital deal sizes shrink by 37pc

7 Mar 2003

Fresh research from Tornado Insider Media has revealed that the average size of venture capital (VC) investments in technology firms shrank by 37pc in 2002. The average deal size dropped from €10m to €6.3m.

According to Tornado, VC in Europe and Israel fell 45pc in 2002, as €5.4bn was invested in hi-tech firms in these regions – this was nearly half of the €9.7bn raised in 2001 and 58pc less than in 2000 when €12.7bn was invested.

The number of VC deals recorded fell to only 732 investments, 35pc less than the 1,134 deals in 2001, and 44pc below the 1,317 deals in 2000.

The UK lead the rest of Europe in terms of deals, with some €1.43bn invested in UK tech companies during 2002 – accounting for some 27pc of all investment in Europe. However, this figure was down 48pc from the €2.74bn invested in 2001, and 73pc below the investments made in 2000 when UK companies raised €5.9bn. This latter investment was more than the entire amount of €5.4bn invested across Europe and Israel in 2002.

Biotech and technology, Tornado says, remain robust under the existing business climate. However, biotechnology actually recorded a slight increase in deals, with 142 deals in 2002 compared with 138 deals in 2001.

By John Kennedy