European VC hits record low

Dow Jones VentureSource data reveals that as a result of such a drop in numbers, the overall media round size has climbed to €2.8m, the highest on record. The amount invested for the entire year was actually the largest amount since 2002, reaching €4.56bn.

The year ended on a low point, with €1.16bn invested in 221 deals, an almost 4% drop in investment compared to the same time in 2006 when 237 deals were backed by €1.2bn.

“It’s just a sign of the times in Europe,” said Jessica Canning, director of global research for VentureSource. “With a sputtering IPO market and mergers and acquisitions hard to come by, only the most viable of European companies are winning over venture capitalists. At the same time, investors are equipping these promising companies with the capital they need to compete globally and to best position them for a liquidity event.”

The healthcare sector was the main beneficiary of higher median founds, with sizes rising by 76% on 2006 to €4.4m. The median for IT companies reached €2.6m and business, consumer and retail companies saw their median deal size climb to €2.4m.

In total, healthcare saw total investment in 2007 dip by only 5% to €1.46bn, despite the fact that in terms of deals flow, it was the worst year on record with only 192 rounds financed. Medical devices saw just 58 deals signed off, again a record low, by received a record high of €381m of venture capital.

Investment in IT was up 2% in 2007 to €2.32bn, the highest since 2002. However, IT deal flow was down 3% to 537 deals.