Click here for printer friendly page
Go4Venture monthly VC bulletin - January 2007
02/05/2007. Source:Go4Venture.
 In many ways, says Go4Venture, this January was the posterchild of the recovery they have been charting for the past four years. Apart from the record amount of money tracked in their Headline Transaction Index in January 2007 (€233m), two key developments were illustrated by the transactions announced during the month: January saw the largest transaction ever in European venture capital, while the market saw the the entry/come-back to the VC market of hedge funds, family offices, investment banks, corporate venturers and wealthy business angels.
January saw the largest transaction ever in European venture capital: c. €76 million raised by Plastic Logic, a UK-based company involved in electronics printed over plastic substrates. On one hand, this demonstrates that Europe is finally learning how to build world-class companies targeting ambitious long-term opportunities. On the other hand the round was led by US firms (to build a plant in Dresden - how is that for globalisation of venture capital?), which highlights that the pool of European venture capital is still fairly shallow. Only a string of successful Kelkoo, Skype, Platic Logics will convince Limited Partners of the potential of European VC as an asset class. This will probably take another investment cycle before we get there.
Another trend which is being confirmed is the entry/come-back to the VC market of hedge funds, family offices, investment banks, corporate venturers and wealthy business angels. That in and of itself indicates the European VC market is firmly back on its feet and developing a new level of maturity. It also creates competition in a European VC market which had become somewhat stifled, with many VC firms in effect inoperative because they haven't been able to raise new funds. At the same time (let's not close our eyes) this may be the beginning of a new bubble, as we can already see pointing in hot areas such as social networking (Web 2.0 in general), clean technology, etc. Nothing to be alarmed of so far (the public markets are not following yet) but a trend to be watched over the coming months (hopefully years!). It also makes life much more complicated for management facing the daunting task of raising funds even though it opens many more avenues - hence why the use of advisers is beco ming more prevalent.
On a different note, readers will notice that we have started a new section, at the end of the Bulletin, for "Tech Private Equity Transactions". Under this label we aim to capture the growing number of technology buyouts, private investments in public equity (PIPE), take-privates and other acquisitions by larger funds.
The reason for tracking these investments (or outright acquisitions) is to highlight the growing importance of crossover investment strategies in European technology (i.e. from early to late stage). As well as creating new opportunities for VC firms (at least for those who have sufficiently large funds), this new trend is attracting new market entrants (private equity and hedge funds) which are bringing with them more financial engineering skills to the sector as a whole (buy and build, use of debt, etc).
In that the technology market is reflecting what is happening in public markets in general, where private equity funds are essentially displacing slop py managers in order to drive shareholder value - for themselves.
Click here to view the full article (pdf 755kb)You need Adobe Acrobat to read this document. If you do not have it, you can download it free from www.adobe.com/products/acrobat/readstep.html
About Go4Venture:
Go4Venture is a London-based independent corporate finance advisory firm focused on providing equity private placement and mergers & acquisition (M&A) services to Europe’s leading technology companies and their investors. Our clients include: Growth companies; VC funds; Buyout funds; and IT corporates. More details can be found at http://www.go4venture.com
|
