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AltAssets is the private equity news and research service from Almeida Capital
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PRINT THIS PAGE European venture capital investment reaches €1.1bn in Q2 200705/09/2007. Source: AltAssets. 
European venture capital investment reached €1.14bn in Q2 2007 despite a drop in deal flow to 213 in Q2 2007 from 223 in Q1 and 265 in the same period last year, according to the quarterly European Venture Capital Report by Dow Jones VentureOne and Ernst & Young. The amount of capital was slightly up from both the €1.11bn invested in Q1 2007 and the €1.09bn invested in Q2 2006. Year-on-year, investment was up and deals were down in nearly every industry, the report found. Healthcare companies raised ten per cent more capital (€290m versus €265m) in 34 per cent fewer deals (41 versus 62) than in the second quarter of 2006.
IT companies took the bulk of the capital, with €690m invested in a total of 138 deals. However, this was down from 143 deals and €556m invested in Q1 2007 and 156 deals and €670m invested in the second quarter of 2006.
The UK was particularly hard hit by the drop in deal counts, with only 61 deals recorded in the second quarter, the lowest number since the analysis began in 2001 and down from 66 in the previous quarter and 72 in the same period of 2006. The country's total deal value also went down to €299m in Q2 2007 from €354m in Q1 and €333m a year ago.
Almost 59 per cent of all venture rounds in Europe during the second quarter were seed, first or second rounds, the report found. The median amount invested in a first round was €3.2m, almost equal to the €3.29m of later-stage deals.
Overall deal sizes jumped in the second quarter of 2007 to €3.12m, up 42 from the same quarter last year (€2.2m). This was also the first time in over six years that the overall medial deal size broke the €3m mark.
'The European venture capital market saw an explosion in early-round investing as €600m was poured into 126 early stage deals,' said Jessica Canning, director of global research for Dow Jones VentureOne. 'The data shows the median amount invested in a first round during the quarter was €3.2m, by far the highest total on record. Add to that a continued interest in later stage deals and the overall median for a deal done in Europe jumped 41 per cent during the second quarter to a record €3.1m.'
'The record median round size in Europe this quarter is the continuation of a trend that we have observed over the last 18 months in which investors are providing greater sums to fewer companies, allowing those companies to better compete globally and build critical mass for an IPO or M&A,' added John De Yonge, research director for the Ernst & Young Global Venture Capital Advisory Group.
Copyright © 2007 AltAssets
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