PE Sector Focus

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• Monthly European Technology Venture Capital Bulletin - November 2008 07 Jan 2009. Source: Go4Venture. Go4Venture's Headline Transactions Index, which captures transactions reported in the professional press, was still riding high towards the end of last year. The December figures (which will be published this month) seem to be showing a similar trend: the HTI is holding up, according to Go4Venture's latest bulletin.

• Venture capitalists predict a difficult 2009 07 Jan 2009. Source: NVCA. US venture capitalists are forecasting a difficult 2009 for the country's economy, the capital markets, and the venture industry as the global financial crisis takes its toll on the entrepreneurial ecosystem. According to the respondents of the third annual National Venture Capital Association (NVCA) Predictions Survey, the coming year will be met with a slowdown in investing across most sectors and a continued weakened exit market. However, most VCs surveyed predict a recovery in 2010 when the IPO market is expected to re-open and those companies and venture firms that weathered the storm will emerge strongly, according to the NVCA survey.

• Monthly European Technology Venture Capital Bulletin - October 2008 17 Dec 2008. Source: Go4Venture. Once more, the Go4Venture's Headline Transaction Index, which captures transactions reported in the professional press, is holding up, just as the venture capital industry prepares itself for a contraction (the length of which is anybody's guess). Why such an apparent discrepancy, asks Go4Venture in the firm's latest bulletin.

• European venture capital: a model is born 26 Nov 2008. Source: Cyril Demaria. The gloom affecting financial markets seems to put a certain pressure on European venture capital investors. Even though out of reach of the credit crunch, venture capital will face difficult times with regard to the development of portfolio companies in a recession, says financial journalist Cyril Demaria. Sequoia Capital, in a widely commented presentation, has drawn drastic conclusions and advises its portfolio companies to radically cut their expenditures.

• Venture capital buying opportunity 18 Nov 2008. Source: Oxford Capital. David Mott, Investment Director. Despite the global credit crisis and emerging recession, it is arguable that today's market conditions offer the best buying opportunity for venture capital funds since 2001. There are currently a large number of high quality deals in the sustainability, healthcare and communications sectors where valuations are lower than in previous years. This, coupled with the opportunity to benefit from tax breaks, makes investments in innovative companies over the next 12 to 18 months an enticing prospect, says David Mott, investment director at Oxford Capital.

• Monthly European Technology Venture Capital Bulletin - September 2008 04 Nov 2008. Source: Go4Venture. While the financial mayhem continues with ongoing uncertainty as to whether public authority actions worldwide are convincing markets to call off their free fall, Go4Venture's Headline Transaction Index (HTI) continues to show some strong figures. September 2008 is virtually level with September the year before, which confirms: the market is focusing on larger, quality opportunities even if overall market figures (including smaller deals) are on a downward trend. In short, speculative propositions will take the brunt of the market adjustment, therefore pre-revenue, early stage companies are seeing the biggest drop. Revenue-generating companies delivering cost savings and/or close-to-fashionable areas where end user demand is strong (such as cleantech or medtech) will continue to do well.

• Venture capital 2.0 08 Oct 2008. Source: Cyril Demaria. For the first time since 1978, there was no venture capital-backed IPO in the US during a quarter, making the second quarter of 2008 the worst on the EVCA records. This was attributed to the consequences of the liquidity crisis - but is this so? In October 2006, Steve Dow already launched a first statement which rippled through the venture capital sphere, by declaring that the venture capital model was 'broken'. Too much money chasing too few deals, not enough exits, no real perspectives of substantial profits on the short term: the diagnosis was severe, especially from this seasoned partner at Sevin Rosen. This was in fact the mark of a much needed revolution in the venture capital world, writes Cyril Demaria.

• Venture capital returns have historically outperformed the market, but with a high degree of volatility 01 Oct 2008. Source: Momentum Venture Management. Over the long term , venture capital returns have been higher than the stock markets. However, the cyclical variations of returns highlight the volatility of the venture industry, according to Momentum Venture Management.

• Recent developments in the European private equity markets 01 Oct 2008. Source: The Directorate-General for Economic and Financial Affairs (ECFIN). Kristiina Raade, Catarina Dantas Machado. This paper from the Directorate-General Economic and Financial Affairs of the European Commission examines market developments in venture capital and buy-out investment in Europe and the US through the analysis of funds raised, investments and exits. It discusses the profitability differential of European venture capital investment in comparison with the US and suggests that it could originate in the different ways in which research is financed and the unequal supply of financing, notably from business angels, for young companies that are not sufficiently mature for venture capital financing.

• Monthly European Technology Venture Capital Bulletin - July 2008 02 Sep 2008. Source: Go4Venture. The Go4Venture's Headline Transaction Index (HTI) for July 2008 confirms the indication observed at the back end of Q2: the market is in good health at the later stage end of the market, making up for the decline in the funding of early stage companies. The total monthly amount invested was €346.8m, a notable 38 per cent higher than €251.7m invested in the same period last year, and Go4Venture tracked 16 large transactions in July, an absolute record for the HTI.

• Quarterly European Venture Capital Report 27 Aug 2008. Source: Dow Jones VentureSource. Europe's venture capital industry recorded another dismal showing in the second quarter of 2008, with just 167 deals completed, the lowest quarterly total in at least nine years. The €858m invested was a 35 per cent drop from the €1.33bn invested in 286 deals over the same period last year, according to Dow Jones VentureSource, which released its Quarterly European Venture Capital Report today. However, early stage rounds accounted for 44 per cent of all deals done in Europe during the first half of the year, indicating that region may be nearing the bottom of its decline as more entrepreneurial companies are starting to enter the venture capital lifecycle.

• Monthly European Technology Venture Capital Bulletin - June 2008 06 Aug 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.

• MoneyTree Report 06 Aug 2008. Source: PricewaterhouseCoopers, National Venture Capital Association, Thomson Reuters. Venture capitalists invested $7.4bn in 990 deals in the second quarter of 2008, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association, based on data provided by Thomson Reuters. Quarterly investment activity was essentially flat compared to the first quarter of 2008 when $7.5bn was invested in 977 deals.

• Ernst & Young – Global Venture Capital Insights and Trends Report 2008 Innovation: the growing importance of venture capital 09 Jul 2008. Source: Ernst & Young. Gil Forer (E&Y-VCAG) and Adj Prof Dr Martin Haemmig (CeTIM - Center for Technology & Innovation Management). The process of globalisation has reduced the potency of many sources of competitive advantage. Companies around the world today enjoy broad access to global resources that help them to compete on factors such as price, process, quality and customer service, diminishing the advantage these confer. One element of competition, however, is harder to replicate and scale successfully: ‘innovation’. On an increasingly flat global playing field, successful innovators differentiate themselves and reap the rewards of the value created, according to this Ernst & Young report.

• German venture capital funds - an attractive investment opportunity 09 Jul 2008. Source: German Private Equity and Venture Capital Association (BVK). Dörte Höppner. Founders and young companies in Germany continue to have a strong need for capital. Venture capital firms are now again investing more often in German start-ups, with the number of founders who have been financed this year up from the previous year's level. Whether this is a sustained trend or merely a short-term straw fire will predominantly hinge upon the ability of venture capital firms to raise sufficient new capital from investors in the coming months. This continues to be a major challenge for German early-stage investors. Yet there has been a further improvement in the situation by comparison with the years before.

• Monthly European Technology Venture Capital Bulletin - May 2008 09 Jul 2008. Source: Go4Venture. Based on Go4Venture's Headline Transaction Index (HTI) index, the VC market is holding up better than Go4Venture expected even if deceleration is creeping in, the firm says in the latest edition of its monthly VC bulletin.

• 2008 Venture Capital Report 09 Jul 2008. Source: WilmerHale. The gradual but steady increase in venture investing activity that has characterised the venture capital market over the past several years continued in 2007. Of greater significance was the more pronounced improvement in the IPO and M&A markets for venture-backed companies over the past year, according to this venture capital report from law firm WilmerHale.

• More than just capital 10 Jun 2008. Source: Barclays Private Equity. Dr Peter Hammermann. The search for a suitable investor can be difficult for small and medium-sized companies. However, the chances of successful collaboration increase if several important criteria are met during the selection process, writes Dr Peter Hammermann, co-head of Barclays Private Equity.

• Monthly European Technology Venture Capital Bulletin - April 2008 28 May 2008. Source: Go4Venture. According to the HTI figures for April 2008, the European market is appearing to hold well, even if the momentum is clearly losing steam. The market continues to show some of the traits which are believed to characterise the slowdown: not so much a brutal stop to investments (as in 2001) but rather a distinct change in the types of investments which are getting made, according to this latest edition of Go4Venture's monthly VC bulletin.

• The value of venture capital: how do VCs value young companies and is a higher valuation always better? 07 May 2008. Source: Scottish Equity Partners. Stuart Paterson. Contrary to popular wisdom, venture capitalists consider it vital for entrepreneurs to be comfortable with the valuation of their company so that they are highly motivated to succeed, writes Stuart Paterson of Scottish Equity Partners.

• SVB Analytics Research Series: Volume 3 02 Apr 2008. Source: SVB Analytics. The timing, amount, price and terms of a future round are not always known when performing a valuation analysis. Historically these unknown factors have often made determining the impact of a future round an exercise in guesswork. In order to bring some science to at least one of those variables, the price, SVB has been conducting intense quantitative research into the step-ups in value between rounds for venture-backed companies, in this, the third in their research series.

• Monthly European Technology Venture Capital Bulletin - February 2008 19 Mar 2008. Source: Go4Venture. Headline transaction index deals in February of this year totalled 32 compared to 22 in February 2007, according to Go4Venture's monthly VC bulletin. In terms of the total monthly amount invested, February is the strongest on record since the HTI was started in 2002.

• Monthly European Technology Venture Capital Bulletin - January 2008 05 Mar 2008. Source: Go4Venture. The bulletin includes the latest figures from Go4Venture's proprietary Headline Transaction Index, an index reflecting tech financing deals as reported in the professional press. Overall, the level of activity continues to be strong and comparable to the high point of a year ago, depending on whether you include the unusually large Plastic Logic deal of €77m in January 2007.