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Software Most Popular Sector For European Venture Investment In Third Quarter This Year

Biopharmaceuticals Dominate Healthcare-Related Investment

Healthcare received 18% of all venture capital investment during the third quarter of 2012, dropping the industry down to third place. Compared with the same period last year, investment fell 32% to €179 million. So too did deal flow, by 55% to 31 deals completed. Despite attracting an 85% share of all healthcare-related investment for the quarter, the biopharmaceuticals sector still experienced a slight decrease of 4% in investment from the same period a year ago, raising €153 million through 21 deals. Investments in the medical devices and equipment sector slumped to €14 million in seven deals during the third quarter, a drop of 86% in amount invested and 76% in deal flow.

Energy & Utilities Drops on Both Counts

Energy and Utilities suffered sizeable drops in both investment and number of deals completed. Companies in the sector raised €40 million through 10 deals, a fall of 73% in capital invested and 23% in deal activity. Investment in renewable companies similarly declined: investment dropped by 27% to €29 million raised and deal flow also fell by 27% to eight deals completed.

Financial Institutions and Services Sector a Bright Spot Within Business & Financial

Business and Financial Services companies raised €150 million during the third quarter, a decrease of 7% compared with the same period a year ago. Conversely, the industry experienced an uptick of 12% in the number of deals, with a total of 37 completed. Investment in the business support services sector dropped by 37%, garnering €74 million through 20 deals. On a positive note, however, the financial institutions and services sector experienced significant gains, raising €45 million through seven deals, more than double the amount raised during last year's third quarter.

Early-Stage Deals Capture a Larger Slice of Deal Flow

Nearly 60% of deals in the third quarter went to early-stage companies, down from 64% in the same period last year.  Early-stage companies also accounted for 24% of capital invested, down from 47% in the same period last year. Second-round deals accounted for 22% of deal flow and 28% of capital invested, up from 18% and 19%, respectively, in the year-ago period. Later-stage deals accounted for 19% of deals, up from 17% a year earlier, and 48% of capital invested, a significant increase from the year-ago period when 28% of capital went to later-stage companies.

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