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Monthly European Technology Venture Capital Bulletin - June 2008
06/08/2008. Source:Go4Venture.
 June 2008 figures show that Go4Venture's Headline Transaction Index (HTI) is only off by six per cent against its mid-point last year. While the market appears to be stable, we must keep in mind that the HTI focuses on published deals which tend to be larger in size, rather than summarising the market as a whole.
What we can extrapolate is that later stage and larger deal activity remains healthy, and seems to be making up for any decline in early-stage financings. One such later stage deal profiled this month is the investment in Achilles Group by HgCapital for €53.1mn. Is this buyout or is it VC? The frontiers between the two worlds are blurring as VCs focus on later-stage opportunities, while private equity is moving to smaller rounds and adopting a more hands-on style closer to what VCs preach. Testament to this blurring of lines is the age of the companies among the large HTI deals (>EUR 7.5mn) this month: most have been in business for more than 5 years - not exactly your average VC company.
Against this rather positive backdrop, there is lots of anxiety over the traditional VC model, which reflects uncertainty about the worsening macroeconomic environment. Analysts have recently pointed out that this year’s Q2 marked the first time since 1978 that there was not an IPO of a VC-backed company in the US. Commentators question whether this is because the model is broken or whether this is simply the industry transitioning from the internet to the cleantech opportunity. What is clear is that the get-rich-quick scheme days for VCs of the late 1990s are long gone, and all players are adjusting their investment strategies to take longer exit prospects into account. Interestingly, in June Sevin Rosen, a top-tier US VC firm, announced an extension to two of its existing funds, waiving the management fees as an inducement.
In Europe, the uncertainty of the cycle is somewhat counter-balanced by the noticeable improvement of the overall eco-system, which makes us hopeful European technology is getting better at producing world-class investor opportunities on a more consistent basis. Signs of optimism in June included:
- Bernard Liautaud, the founder of Business Objects (acquired by SAP in January), joined Balderton Capital, bringing with him some rather rare experience in taking a European company from start to publicly-listed world leader in its category.
- Coller Capital, a private equity secondary specialist, financed the privatisation of Prelude Trust (managed by DFJ Esprit). One analyst reported this as "yet another measure of Jeremy Coller's enthusiasm for under-valued venture assets". Some shrewd players obviously believe there is money to be made in European VC!
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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. Clients include: Growth companies; VC funds; Buyout funds; and IT corporates. More details can be found at www.go4venture.com.
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