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Venture Capital Investment Continues To Fall In Europe

LONDON, April 30, 2012 /PRNewswire/ -- During the first quarter of 2012, the drop in venture capital deal activity for European companies was slight compared to the sharp drop in the amount of capital invested over the same period last year, according to Dow Jones VentureSource.

Venture-backed companies based in Europe raised euro 762 million for 241 deals, a 41% decline in capital raised and a 7% decline in deals over the same period in 2011. The first quarter's deal figure of 241 matches the fourth quarter of last year as the weakest since VentureSource began tracking the region in 2000.

"The difficult fund-raising environment and shrinking number of exits means less money is flowing into venture firms and, therefore, less is flowing out," said Jessica Canning, global research director, Dow Jones VentureSource.  "But there are some positive signs.  European venture fund-raising rose 8% in the first quarter and financing deals didn't drop as significantly as investment which means VCs are still finding companies they want to support."

The first quarter's weakness in investments mirrored the exit environment, which was the weakest for venture-backed exits since the first quarter of 2000.  During the first quarter, 27 European venture-backed companies were acquired, a 46% drop in deals from the same period last year, and two companies went public, down from three initial public offerings (IPOs) in the first quarter of 2011.

Consumer Services Deal Flow Up but Investment DeclinesConsumer services companies raised euro 167 million for 67 deals in the first quarter of 2012, a 60% decline in investment despite a 10% rise in deals over the same period last year.  More than 64% of the capital collected by the consumer services industry went to the consumer information services sector, which includes social media, online entertainment and search portals, but it was the retail and media companies that showed the most consistent growth over the same period last year.  Both the retail and media sectors grew 100% in deal flow to 10 deals each; media showed a 90% growth in investments as euro 10 million was raised while investment in retail companies more than doubled to euro 39 million.   

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