New figures: Germany bucks declining VC trend in rest of Europe

Nina Fowler 2013-01-29 2

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German venture capital investment is rising against a downhill trend in the rest of Europe according to Dow Jones VentureSource.

New figures, published yesterday, ranked Germany second behind the UK in terms of overall deal value in Europe last year, with €822 million across 189 deals compared to the UK’s €1.4 billion across 295 deals in 2012.

Year-on-year, though, the UK showed a five per cent decline in investment and 10 per cent decline in number of deals. Germany’s figures showed a 48 per cent rise in investment and a 16 per cent increase in deal flow.

That rise is an anomaly across Europe. Overall, European companies raised €4.4 billion from 1074 venture capital deals last year, down nine per cent in capital invested and 11 per cent in deal numbers compared to 2011.

Merger and acquisition activity, meanwhile, is at its lowest since VentureSource started tracking data in Europe back in 2000.

Putting those two trends together, as Dow Jones VentureSource European research manager Anna Malterre did in yesterday’s press release, “investors appear trapped in their current investments, needing to wait longer to recoup their financial returns while at the same time lacking funds to fuel new ventures”.

Take heart, startups – it’s not as bad as it looks

Founders hoping to raise funding this year shouldn’t give up just yet. While just a taste of the methodology is made public, these figures appear to cover a broad range of sectors – Communications and Networking, Electronics and Computer Hardware, Semiconductors, Software, Consumer Information Services, and Media and Content.

The consumer services industry in Europe – aka consumer internet – actually showed its biggest investment year on record, rising 13 per cent and 8 per cent respectively to €1.3 billion for 283 deals in 2012.

More than half of that capital went to social media, entertainment and online shopping companies, who raised €779m for 186 deals in 2012 (up four per cent and nine per cent respectively since 2011).

Anyway, plentiful venture capital is just one measure of a healthy startup ecosystem. Without wanting to stifle the growth of promising up-and-comers, less venture capital might mean bigger deals for the true stars and a consolidation for the rest.

Other sources for info on venture capital deal flow include the European Venture Capital Association’s annual yearbook and Germany’s venture capital association BVK.

Image credit: Flickr user CarbonNYC

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