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French venture suffers

Venture capital investments in France are on a path of decline, falling 17 per cent from €306 million in the second half of 2001 to €254 million for the first half of this year, according to L’Indicateur Chausson Finance, the French corporate finance boutique. Venture investments have been falling steadily since the second half of 2000.

Only 182 companies received funding in the first half of this year compared to 237 in the previous six months. However, the average amount invested remained stable at €1.4 million per company.

Good news for new investments which accounted for the majority of transactions with a 54 per cent share. Follow-on rounds took the remaining 46 per cent.

While investments are falling, the number of players is steadily increasing with the study recording 47 French firms, compared to 44 in the previous half. The most active investor was Sofinnova investing €27.6 million in 14 transactions. Concentration of investments is increasing. Investments from the top ten venture capital firms accounted for 64 per cent of total investments, compared to 52 per cent a year ago. New entrants to the top ten venture firms include Sofinnova, Apax Partners, AGF Private Equity, CLAM and LCF Rothschild. Falling out of the top ten for the first half of the year are 3i France, Siparex, ETF Group France, Axa Placement Innovation and Natexis Ventech.

In terms of sector, logistics remains the preferred choice accounting for 34 per cent of total investments at €86 million. Healthcare and biotech follow closely with 24 per cent at €60 million. Internet and e-commerce and telecoms both take 13 per cent of total investments with €34 million and €32 million respectively. The wireless sector is in decline with 4 per cent of total investments taking €11 million.