Venture Deals in Europe Fall to Lowest Level This Decade
European venture investors continue to be highly selective as deal activity in the first quarter dropped off considerably while the median amount of capital put into a round shot upward, Dow Jones VentureWire reports.
The number of venture capital investments in Europe fell to 180, the lowest total this decade and the first time it has ever dipped below 200, according to data released today from VentureSource. A year ago, there were 239 deals.
Still, the amount of capital managed to rise slightly to EUR 1.14 billion from EUR 1.12 billion in the year-ago quarter, thanks in part to more money being deployed in later-stage deals. This drove the median amount per round to the highest quarterly total in the decade at EUR 3.23 million, which compared with EUR 2.55 million last year.
The number of deals has dropped each year since 2000, while the amount of investment began to rise in 2004 and hasn’t stopped since.
Indeed, the move by firms to put more money into later-stage deals has had a large effect. In the first quarter, the amount of money invested in later-stage rounds - meaning third round or greater - climbed 8% to EUR 621.6 million from EUR 569.6 million in the year-ago quarter and rose 31% from the fourth quarter total of EUR 469 million. The jump occurred despite there being 29% less deals from a year ago - 58 versus 82.
In a move likely to continue to increase later-stage funding, Index Ventures closed a EUR 400 million growth fund in January. At the time of the fund-raising, Index cited maturing information technology markets and the capital demands of drug-discovery companies preparing to push products to market as spurring the need for the new growth fund, VentureWire said.
The amount of money in seed through second rounds fell 5% to EUR 495.7 million from EUR 520.9 million a year earlier. Likewise the number of these deals fell 23% to 110 from 142.
Information technology took the biggest hit in deal count with 80 deals compared to 142 in the previous quarter and 153 in the first quarter of 2007. The deal count was the lowest since at least 2000.
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