(U.S. Mint)
Venture capital (VC) investment volume rose in the second quarter of 2012 compared to the second quarter of 2011, but the number of VC deals dropped sharply. The number and volume of investments in European science-based companies, says financial industry research service Dow Jones VentureSource, declined by double-digit percentages in the second quarter of 2012 compared to last year.
Companies backed by VCs and based in Europe raised €1.3 billion in 273 venture capital deals during the second quarter of 2012, a 14 percent increase in the amount of funds raised but a 20 percent decline in deals from the same period last year. For the first half of the year, VC investments amounted to €2.2 billion in 550 deals, a drop of 7 percent in capital and 10 percent decline in deals from the year-ago period.
Among individual countries, the U.K. remained the favorite venture capital destination, raising €504 million in 71 deals, a 75 percent gain in investment volume from the second quarter of last year, while the number of deals declined by 15 percent. German companies collected €185 million in 51 deals, a 47 percent increase in investment and a 31 percent jump in the number of deals compared with the same period last year. French companies raised raised €169 million in 65 deals in the second quarter, a 26 percent drop in investment and a 17 percent decline in deals from the same period last year.
Investments in European companies based on scientific discoveries, in general, appear to have lost considerable favor among venture investors. Investment in medical device companies fell by two-thirds (68%) to €33 million in 17 deals during the second quarter of 2012, while energy/utility enterprise investments in Europe raised €42 million in nine deals in the second quarter, a decline of 67 percent in investment volume and 63 percent in number of deals. Most of the energy company investments work in renewable energy solutions, which raised €35 million in seven deals.
The only bright spot for venture investment in science-based companies in Europe were biopharmaceuticals that raised €196 million in 31 deals, a 7 percent gain over the second quarter of 2011. However, investments in the health care sector overall collected €237 million in 50 deals, a 24 percent decline in investment and 33 percent decline in deals.
Consumer services — primarily Internet services, which include social media, online entertainment, and search companies — were the big winners in Europe among venture-backed companies in the second quarter. These enterprises raised €493 million through 72 deals, more than double the €239 million raised during the same period last year, although the number of deals remained about the same. Nearly two-thirds of the capital raised in this category went to consumer Internet services.
Other than these Internet services, investments in information technology (IT) companies were mixed in the second quarter. Companies in the European IT sector overall raised €215 million in 73 deals, an 18 percent decline in investment volume and a 17 percent drop in number of deals compared to the same period last year. Software companies, however, collected €136 million in 54 deals, a 24 percent increase in investment volume, while the number of deals dropped by 8 percent.
Early stage investments emerged as favorites among European VC investors in the second quarter, accounting for about six in 10 of the deals, and about one-third (32%) of the investment volume, almost the same proportion as last year. Later-stage companies collected about half (49%, up from 39% last year) of the investment volume during the second quarter, while accounting for only about one in five (19%) of the deals.
Read more:
- VC Funding Cut for U.S. Firms, Science Companies Take Hit
- U.S. Venture Deals, Dollars Decline in Q1 2012
- Venture Funds in U.S., Europe Raise More Cash in Q1
- Venture Investment for European Companies Drops in 2011
- U.S. VC Investments Up for 2011, Flat for Science Companies
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