European venture capital deal activity fell by 28pc this year


3 Aug 2011

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There has been a 28pc decline in European venture capital deal activity from the previous year, a Dow Jones report says.

According to the Dow Jones Venture Source, European venture-backed companies raised €2.2bn through 447 deals in the first half of 2011. Capital invested was flat.

Both capital raised and the amount of European venture-backed IPOs were up slightly on last year, reaching their highest level since the first half of 2007.

However, while the first half of 2007 saw 27 IPOs which raised €723m, in the first half of 2011 there were only nine IPOs which reached €611m.

“With the ink barely dry on a second bailout for Greece, it’s clear that the sovereign debt crisis in Europe is far from over, either for individual economies or in terms of contagion risk," said Anthony Sheldon, research manager of Dow Jones VentureSource.

“Worries about Europe’s sluggish and uneven economic recovery are key reasons for caution among venture capital investors. In such a febrile atmosphere, venture investors may look for a smaller number of derisked later-stage investments in core industries, leaving less for investments in new enterprises.”

The UK was the most popular destination for venture capital investment in the continent, taking 35pc of overall investment in the first half of 2011.

Technology

The IT sector saw its lowest-ever half-year levels for capital raised, which fell by 40pc to €384m, and deal flow, which declined by 35pc to 122 completed deals.

Software remained the largest IT segment, experiencing 69pc of deals and 55pc of investment.

Investment for software fell by 21pc from last year to €213m. Deal flow also declined, falling by 27pc to 84 completed deals.

Web companies were the best performers in capital invested for the consumer services industry. It tripled its capital raised to €522m and its deal flow rose by 13pc to 72 deals, marking its best half-year for investment since the first half of 2000.