Report: European VC funding bounces back, IT is the "star performer"

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European VC funding has bounced back. That’s according to Q2 figures produced by Dow Jones VentureSource which reports that investment is up by 50 percent compared to the record low of this time last year. €1.1 billion into 289 deals against 252 deals, which raised just €735 million.

But specifically, says Dow Jones, the Information Technology (IT) industry, which apparently accounted for much of the venture market’s losses during the economic downturn, was the “star performer” in the most recent quarter. IT saw a 69% increase in investment from the second quarter last year to €334 million, as well as a 13% increase in deal flow to 90 completed deals. For the first time in two years, the report notes, IT was Europe’s largest industry for venture investment, taking 31% of overall investment.

Here’s a few more interesting tidbits quoted from the report:

Software

Software, traditionally the largest IT sector, took 46% of IT investment and 64% of deals. Compared with the same period last year, investment was up by 52% to €153 million and deal flow was up by 23% to 58 deals.

Semiconductors

The semiconductors segment, which bucked the downward trend in the first quarter of this year, continued to grow for the second consecutive quarter. Semiconductors companies raised €122 million for 13 deals, almost a fivefold increase from last year’s investment total. Among the notable deals in this sector was United Kingdom-based Icera, which raised €33.86 million for a later-stage round.

Overall country break downs (not specific to IT)

The report also records the UK as the favorite destination for venture capital in Europe. VCs put €338 million into 67 deals, up 70% from the €199 million (59 deals) during the same period last year. The UK saw its share of total European investment increase from 27% to 32%.

France came second, with VC investment rising by 17% to €221 million. Deal flow was down 6% to 73 completed deals and France’s share of total European investment was down from 26% to 21%.

Germany was in third place as investment increased by 138% from the same period last year to €186 million.

The main Nordic markets saw an increase in investment. Sweden was up 28% to €79 million, placing fourth among tracked European countries, Norway was up 175% to €60 million in fifth place, Denmark rose 57% to €35 million, and Finland rose 187% to €11 million – “albeit from its lowest quarterly total on record of €4 million a year earlier”, says the repoprt.

Lastly, I’ll leave you with this positive quote from Arno Castanet, research manager, Dow Jones VentureSource:

“After the debt crisis, cautious optimism is emerging… Investors are refocusing their goals, going back to what they know and investing in areas and industries where they have seen previous success including information technology, software and and healthcare.”

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