Asset AllocationJanuary 7, 2014

Record Investment in European Venture Capital

<em>Investors fly to Europe as small businesses take off.</em>

Reported by Featured Author

(January 7, 2014) — 2013 was a bumper year for small European companies with investors throwing record levels of capital at the region’s start-ups, data has shown.

Some €6.3 billion ($8.3 billion) was plunged into venture capital in the continent over the last 12 months, according to data monitor Preqin, marking a 37% increase on the €4.6 billion committed in 2012. The number of deals also rose by 8% to 1,352 from 1,250. This represented the highest number—and highest overall proportion—of global transactions since Peqin began recording data in 2007.

“The European venture capital industry has witnessed significant growth throughout 2013, with a record number of investments taking place, as well as a record amount of capital being invested in companies throughout the continent,” said Ignatius Fogarty, head of private equity products, Preqin. “This should be welcome news to many economies across the region that are looking to young, entrepreneurial firms to boost growth and development.”

There was also a massive increase in the number and volume of deals outside the usual hub areas, Preqin reported. Transactions outside North America, Europe, Greater China, India, and Israel rose by 38% to 319 from 231 in 2012, with a 148% increase in value to $2.1 billion from $856 million in 2012.

The US, which has long held the crown in terms of the number and value of deals, saw a slight fall in the level of committed capital, down from $32.9 billion to $31.6 billion, but a much lower volume meant completed transactions were worth much more.

“Across the globe, even though there has been a slight decline in the number of venture capital financings taking place in 2013 compared to the previous year, the amount of capital and average investment size across all venture capital stages has increased, providing firms with more capital to help grow their companies and ideas, “ concluded Fogarty.

Internet-focussed companies saw the largest number and value of deals last year, taking around 25% of each total. Healthcare was also popular, taking 22% of all value in 2012, through just 16% of deals.