Venture Capital Market in Europe
Map of Europe
Investment Decline
Investment into European companies continued its year-over-year decline during a weak fourth quarter of 2012, as Europe-based companies raised €967 million ($1.8 billion US) from 233 venture capital deals, according to Dow Jones Venture Source. The drop represents a 26% decrease in capital and a 22% decrease in deals from the same period in 2011. Investors appear trapped in their current investments, needing to wait longer to recoup their financial returns while at the same time lacking funds to fuel new ventures. However, the renewed trust in early-stage companies and the consumer services industry are positive signs. Due to the growing interest in social media, online shopping and entertainment, the venture capital industry in Europe should remain attractive in 2013 provided it can transform VC appetites into revenues. Venture capital experts like Efraim Landa can elaborate on 2013 expectations.
Mergers and Acquisitions
A total of 33 European venture-backed companies were acquired during the fourth quarter of 2012, compared with 45 during the same period in 2011. Over the whole of 2012, 145 companies exited via M&A, a drop of 30% from the 2011 figure and the lowest count for Europe.
European Venture Capital Statistics:
In 2012, 16 venture-backed companies went public compared with 15 in 2011.
Two-thirds (67%) of deals in the fourth quarter went to early-stage companies, up from 55% in the same period last year. Early-stage companies also accounted for 35% of capital invested, up from 31% in the same period last year. Second-round deals accounted for 19% of deal flow and 24% of capital invested, down from 20% and 27%, respectively, in the year-ago period. Later-stage deals accounted for 14% of deals, down from 24% a year earlier, and 41% of capital invested, matching that of the year-ago period.
Consumer Services, Social media, Entertainment and Online Shopping
In 2012, the Consumer Services industry registered its largest allocation of investment in a year since 2000. The VC industry surpassed healthcare in receiving the most investment capital over the course of the year, with €1.3 billion ($1.7 billion US) for 283 deals during 2012, an increase of 13% and 8% respectively from 2011.
The industry collected €319 million ($4.2 million US) in 63 deals during the fourth quarter of 2012, an increase of 55% in investment despite a 6% drop in deal flow.
More than half of the capital collected by the Consumer Services industry went to social media, entertainment and online shopping companies in the Consumer Information Services sector.
Healthcare dips to all-time investment low
Although Healthcare registered its lowest allocation of investment for the industry on record, it still managed to beat the Information Technology (IT) industry to second position in terms of capital invested. The industry collected €983 million for 186 deals, a decline of 29% and 30% from 2011 respectively. Biopharmaceuticals took the lion’s share of industry investment as 113 deals raised €772 million ($1.1billion US), a 20% decline in deals and a 19% decrease in investment.
Communications and Networking Sector Gives Boost to IT
The uptick in IT industry investment during 2012 was largely due to increased capital directed into companies operating in the Communications and Networking sector. The sector pulled in €156 million ($205 million US) across 30 deals during the year, a 40% increase in investment. The industry drew €965 million ($1.3 billion US) during 2012, an uptick of 5% year-over-year. Deal flow, however, dropped by 9% to 305. IT posted shallower declines in deal flow and investment for the fourth quarter compared to other industries, collecting €169 million ($2.2 million US) for 75 deals, a respective 24% and 7% drop from the year-ago period.
The Business and Financial services industry
Failed to post growth over the past year,despite a boost from financial services companies. These companies attracted €132 million ($1.7million US) for 30 deals during 2012, up 43% in both investment and deal activity from 2011. However, a 22% drop to €379 million ($5 million US) for the Business Support Services sector offset any industry gains. Overall, the Business and Financial Services industry collected €590 million ($776.7 million US) in 158 deals during 2012, a respective 8% and 3% decline compared with figures for 2011.
Investment into European companies continued its year-over-year decline during a weak fourth quarter of 2012, as Europe-based companies raised €967 million ($1.8 billion US) from 233 venture capital deals, according to Dow Jones Venture Source. The drop represents a 26% decrease in capital and a 22% decrease in deals from the same period in 2011. Investors appear trapped in their current investments, needing to wait longer to recoup their financial returns while at the same time lacking funds to fuel new ventures. However, the renewed trust in early-stage companies and the consumer services industry are positive signs. Due to the growing interest in social media, online shopping and entertainment, the venture capital industry in Europe should remain attractive in 2013 provided it can transform VC appetites into revenues. Venture capital experts like Efraim Landa can elaborate on 2013 expectations.
Mergers and Acquisitions
A total of 33 European venture-backed companies were acquired during the fourth quarter of 2012, compared with 45 during the same period in 2011. Over the whole of 2012, 145 companies exited via M&A, a drop of 30% from the 2011 figure and the lowest count for Europe.
European Venture Capital Statistics:
In 2012, 16 venture-backed companies went public compared with 15 in 2011.
Two-thirds (67%) of deals in the fourth quarter went to early-stage companies, up from 55% in the same period last year. Early-stage companies also accounted for 35% of capital invested, up from 31% in the same period last year. Second-round deals accounted for 19% of deal flow and 24% of capital invested, down from 20% and 27%, respectively, in the year-ago period. Later-stage deals accounted for 14% of deals, down from 24% a year earlier, and 41% of capital invested, matching that of the year-ago period.
Consumer Services, Social media, Entertainment and Online Shopping
In 2012, the Consumer Services industry registered its largest allocation of investment in a year since 2000. The VC industry surpassed healthcare in receiving the most investment capital over the course of the year, with €1.3 billion ($1.7 billion US) for 283 deals during 2012, an increase of 13% and 8% respectively from 2011.
The industry collected €319 million ($4.2 million US) in 63 deals during the fourth quarter of 2012, an increase of 55% in investment despite a 6% drop in deal flow.
More than half of the capital collected by the Consumer Services industry went to social media, entertainment and online shopping companies in the Consumer Information Services sector.
Healthcare dips to all-time investment low
Although Healthcare registered its lowest allocation of investment for the industry on record, it still managed to beat the Information Technology (IT) industry to second position in terms of capital invested. The industry collected €983 million for 186 deals, a decline of 29% and 30% from 2011 respectively. Biopharmaceuticals took the lion’s share of industry investment as 113 deals raised €772 million ($1.1billion US), a 20% decline in deals and a 19% decrease in investment.
Communications and Networking Sector Gives Boost to IT
The uptick in IT industry investment during 2012 was largely due to increased capital directed into companies operating in the Communications and Networking sector. The sector pulled in €156 million ($205 million US) across 30 deals during the year, a 40% increase in investment. The industry drew €965 million ($1.3 billion US) during 2012, an uptick of 5% year-over-year. Deal flow, however, dropped by 9% to 305. IT posted shallower declines in deal flow and investment for the fourth quarter compared to other industries, collecting €169 million ($2.2 million US) for 75 deals, a respective 24% and 7% drop from the year-ago period.
The Business and Financial services industry
Failed to post growth over the past year,despite a boost from financial services companies. These companies attracted €132 million ($1.7million US) for 30 deals during 2012, up 43% in both investment and deal activity from 2011. However, a 22% drop to €379 million ($5 million US) for the Business Support Services sector offset any industry gains. Overall, the Business and Financial Services industry collected €590 million ($776.7 million US) in 158 deals during 2012, a respective 8% and 3% decline compared with figures for 2011.