LARGER, LATER DEALS DRIVE EUROPEAN VENTURE CAPITAL INVESTMENT ...
FOR IMMEDIATE RELEASE
Adam Wade Kate Dobbin William Mutton
Dow Jones VentureOne Dow Jones & Co. Ernst & Young Global
(415) 439-6666 +44 20 7842 9684 +44 20 7980 0532
firstname.lastname@example.org +44 77 4832 3628 William.Mutton@uk.ey.com
LARGER, LATER DEALS DRIVE EUROPEAN VENTURE
CAPITAL INVESTMENT UP 22% TO €1.18B IN 3RD QUARTER
Dow Jones VentureOne and Ernst & Young Report Finds Greater Investment in Fewer
Deals; Bright Spots for Business/Consumer/Retail, Medical Devices, Info Services
LONDON and NEW YORK (6 November 2007)—European venture capital investment
climbed to €1.18 billion in the third quarter of 2007, with half of this capital flowing exclusively
to later-stage deals, according to the Quarterly European Venture Capital Report released today
by Dow Jones VentureOne and Ernst & Young.
This was a 22% increase over amounts invested during the third quarter last year, despite there
being 28 fewer deals. The 210 deals completed during the third quarter of 2007 was the lowest
quarterly deal volume for Europe in at least six years.
“The growth in European venture capital investment this quarter comes from later stage
investments and services-focused deals. While European seed and first round investment
remained stable, later stage investment grew. Contributing factors include a lengthening time to
from a company’s initial VC financing to an M&A or IPO, requiring investors to fund operations
for a longer period, and the need to provide European portfolio companies with the resources to
compete globally. An increasingly supportive exit environment for venture-backed companies
also encourages investors to provide additional resources to high potential later-stage
companies." said John de Yonge, Research Director for the Ernst & Young Global Venture
Capital Advisory Group. "The growing emphasis on services deals is part of a global trend in
which investors are attracted by the relatively low capital requirements of services companies,
their ability to acquire customers rapidly, and the strong exit valuations they are receiving,
particularly in corporate acquisitions.”
The report showed that Europe’s business/consumer/retail industry saw the most dramatic
upswing with €214 million invested in 31 rounds during the third quarter. That was more than
four times the amount invested in the space over the same period last year and the industry’s
highest quarterly total since the first quarter of 2002. The bulk of investments, some €126
million, went into 12 rounds for “consumer/business services” companies.
Information Services the Hot IT Sector; Medical Devices Drive Health Care’s Growth
European information technology (IT) companies attracted the bulk of the capital overall in the
third quarter with nearly €557 million invested in 108 deals. And, even though IT deals were
down 19% from the 133 completed in the third quarter of 2006, this was a 17% increase over the
€477 million put into the space last year and the eighth straight quarter of year-over-year
increases in investment.
According to the report, the quarterly growth in IT investments came solely in the “information
services” sector, which includes most of today’s Web-based innovations. Investments in this
sector were up more than three-fold, as €161 million was put to work in 29 deals compared to
just €49 million invested in 19 deals in the third quarter of 2006. Over half of this capital, some
€88 million, was invested in 11 second round deals. The information services sector overall is on
pace to see its greatest investment total since 2001.
Overall, health care companies saw 26% fewer deals (48 v. 65) and 12% less capital (€324
million v. €368 million) invested overall compared to the third quarter last year. Even so,
medical device companies posted substantial gains, with €115 million invested in 20 deals.
That’s a 100% increase over the €57 million invested in the same number of medical device
deals in the third quarter of 2006. Nearly 67%, or €77 million, of this capital went into seven
Biopharmaceutical deals once again attracted the majority of venture investments in European
health care companies with €192 million invested in 22 deals, down sharply from the €299
million put into 38 deals during the same period last year.
The report also found that European venture capitalists continue to invest in energy companies.
There were six energy deals in the third quarter, one off from the same period last year, but
investment rose 38% to €36 million. In just nine months, €189 million has been invested in
Europe’s energy sector, on pace to best last year’s annual record of €197 million.
European Early-Stage Investments Up But Later Rounds See More Capital
“For the second quarter in a row, the median deal size of a European venture capital reached a
record €3 million," said Jessica Canning, Director of Global Research for Dow Jones
VentureOne. "The data shows that while venture capitalists are participating in fewer deals than
in previous years, they are putting more capital to work and especially in later-stage deals, which
saw a 44% increase in euros invested during the third quarter compared to the same period last
Almost 65% of all venture rounds in Europe during the third quarter were seed, first or second
rounds. Investments into these rounds grew 18% over the third quarter of 2006 to reach €588
million. However, later-stage rounds accounted for nearly 50%, roughly €593 million, of all
venture capital invested in Europe in the quarter. The report found that, through the first nine
months of 2007, an unprecedented 49% of all venture investments Europe went to later rounds.
The median amount invested in a first round was €2.94 million, almost equal to the €3.0 million
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