Euro VC figs fall in Q1&2 2001

Investment activity in Europe fell by over 17 per cent for the first six months of 2001. Figures announced at the European Venture Capital Association’s (EVCA) Technology Investment Conference in Helsinki reveal e11.1 billion was invested in 4,006 companies, compared to e13.5 billion in 4,630 companies for the same period in 2000. Early stage investment has been hit hardest, while buyouts remain stable.

Venture capital investments (seed, start-up and expansion) fell 27 per cent from e7.3 billion to e5.3 billion. By volume, numbers fell by nine per cent, indicating a smaller average investment per company of e1.5 million, compared to e1.8 million the previous year.

The high tech sector suffered with investments down 40 per cent from e4.4 billion to e2.6 billion and the number of companies backed fell by 12 per cent. Average investment size also fell from e1.9 million to e1.3 million. The survey records some growth in consumer and computer-related investments, while the allocation to communications businesses has fallen.

“The decrease in amounts invested in venture capital shown in the figures can be explained in part by a decrease in investment activity, but also by the decrease in valuations,” said Keith Arundale, European venture capital leader for the technology industry group at PricewaterhouseCoopers. He added: “Technology investing in Europe is holding up reasonably well compared to the US, which suffered a much bigger decline in 2001.”

Later stage investing was down slightly on last year. Buyouts accounted for 43.6 per cent of total investments, attracting commitments of e4.86 billion only four per cent down on the previous year’s e5.8 billion. The number of companies backed fell from 430 to 312, while average investment size rose from e11.8 million to e15.6 million.

In terms of divestments, figures were up in spite of the virtual closure of the public markets as an exit route. Total amount divested stood at e5.3 billion from 2,588 companies, compared to e3.9 billion from 1,495 companies the previous year. Write-offs rose to e663 million from 363 companies.

The EVCA mid-year survey of pan-European private equity and venture capital activity was conducted by PricewaterhouseCoopers and covers 742 private equity houses in 22 countries.