For the second consecutive quarter, early stage investments boosted overall venture capital activity in European companies. In the second quarter, more than $1.2 million was invested in 213 deals, according to the quarterly European Venture Capital Report released yesterday by Ernst & Young and Dow Jones VentureOne. This is about 13% more capital invested than in the second quarter of 2005 when VCs put almost $1.1 billion to work in 304 deals.
Though deal flow was down in the second quarter, the report found that there was significant number of first- and second-round deals, as early stage activity dominated the European landscape. Seed and first round deals accounted for about 43% of all investments. VCs were particulartly hot on early stage deals in the United Kingdom, where early stage deals represented 53% of deal flow, and in France, which accounted for 43% of the deal flow, a much greater portion than the 29% the country posted in the second quarter of 2005.
As occurred in the United States in the second quarter, interest in emerging areas such as energy as well as key technology segments drew the attention of early stage investors in Europe.