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Venture Investment for European Companies Drops in 2011

Currency dice (MD4 Group/Flickr)Venture capital declined 14 percent and number of deals dropped 19 percent for European companies in 2011 compared to 2010, with €4.4 billion ($US 5.8 billion) going into 1,012 deals. Industries based on scientific discoveries were among those suffering double-digit percentage declines from the previous year.

Dow Jones VentureSource that compiled the data says it marks the lowest annual deal count for Europe since VentureSource began following the region in 2000. The fourth quarter of 2011 was particularly weak, with 194 deals attracting €1.1 billion, a decline of 43 percent in deals and 38 percent cut in investment over the fourth quarter of 2010. The fourth quarter is normally an active period for venture capital (VC) investments.

Biopharmaceuticals gained most of the European health care industry’s investments in 2011 as 121 deals raised €856 million, a 29 percent decline in deals and 20 percent decline in investment. On a percentage basis, medical device companies fared a little better in 2011, with reductions of 7 percent in capital volume and numbers of deals with their €323 million raised in 91 transactions.

The energy and utilities sector also recorded large percentage venture investment declines in 2011. Companies in this industry raised €253 million in 56 deals, declines of 25 and 26 percent respectively compared to 2010. Renewable energy companies accounted for nearly all of the investment deals (49) and capital raised (€238 million) in this industry.

As in the U.S., consumer information services companies — particularly Web-based social media, entertainment, and shopping companies — were favorite VC investment targets, attracting €691 million in 192 deals during 2011, a 79 percent increase in investment, but an 8 percent drop in transactions from 2010. Software remained the most popular European IT sector among investors in 2011, gaining €812 million in 270 deals, a 14 percent drop in investment volume and 13 percent decline in number of deals.

The U.K., France, and Germany were the three favorite countries for VC investments in 2011, and in that order, but all three countries experienced double-digit declines in investment volume and numbers of deals. Sweden ranked fourth, raising €299 million, a 7 percent increase over 2010. The 67 deals in Sweden, however, marked a 36 percent drop.

Read more: U.S. VC Investments Up for 2011, Flat for Science Companies

Photo: MD4 Group/Flickr

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