Overall venture capital investment in Europe fell last year, but investment in “Cleantech” rose. The news suggests that VCs are moving away from investments in Web 2.0 technology startups towards higher growth investments related to the boom in environmental technology. However, given that there were so few Web 2.0 related deals from European VCs last year anyway, the sector is hardly going to take this as a body blow. Anecdotal evidence suggests that EU tech startups remain largely hitched to seed capital and early stage Angel money anyway. The contrast with the US market, however, is palpable. Recent data showed that 2007 was a record year for venture backed liquidity in the US.
Data released today by research house Library House [PDF] shows that the amount of disclosed venture capital invested in Europe contracted during the fourth quarter of 2007 to €1.21bn, compared to €1.36bn last quarter and €1.52bn in Q4 2006. Even taking into account any future late reporting of Q4 deals, 2007 investment levels are more than 5% down on those seen in 2006, dropping from €5.64bn in 2006 to €5.27bn in 2007.
Looking at the report, some name-checked UK companies in the so-called “Mediatech” space (VC code for Web 2.0 tech) include Skinkers (raised €11.1m) in the UK; MyStrands, in Spain (€16.3 million); French mobile media player Streamezzo (€15m); and Israel’s Imagine Communications (€10.4m).
The UK saw its share of the total amount of European venture capital invested drop to 22% in Q4 2007, the lowest share in two years. Library House says this demonstrates that “venture capitalists are increasingly focussing on the whole of Europe and not just the UK.” But the UK still accounted for 27% of all venture capital invested in 2007 compared to 29% in 2006, a drop of only 2%. Some of the countries that have increased their total share of venture capital investment over the period, at the slight expense of the UK, include the Netherlands, Switzerland, Germany, and France.
The European Cleantech sector continued to rocket, breaking the €200m barrier for the first time, attracting a total of €206m of disclosed venture capital in Q4 2007 compared to €196m the previous quarter.
Over the whole of 2007, a total of 202 European venture backed companies (across all sectors not just IT) were acquired. The second half of the year was weaker than the first, with 70 trade sales compared to 132 in the first half. The number of venture backed IPOs was also down between the first half and the second half of 2007 with only 31% of the year’s total recorded during the last two quarters.