European Venture Capital Activity Down 28% In The First Half Of 2011

If you needed more proof that the venture capital industry here in Europe is struggling to keep up, here are some new facts and figures from Dow Jones VentureSource to prove there’s most certainly no bubble in these parts.

According to DJV, European venture-backed companies have raised 2.2 billion euros through 447 deals in the first half of this year, a 28 percent decline in deal activity from the first half of 2010.

Yes, that’s a drop of nearly a third.

Dow Jones VentureSource reports both capital raised and the number of European venture-backed IPOs were up slightly compared to last year, reaching their highest six-month level since the first half of 2007. However, the nine flotations – which raised a total of 611 million euros in the first half of 2011 – were still some way off the 27 IPOs that raised 723 million euros in the first six months of 2007.

The silver lining: consumer Web companies, including social media, entertainment and search startups, seem to hold their own, with a year-on-year increase in investment of nearly 150 percent – 522 million euros was raised through 72 deals.

Meanwwhile, the information technology industry as a whole recorded its lowest ever half-year deal count with deal flow down by 35 percent. In the IT segment, only 122 VC deals were completed and capital raised declined 40 percent (to 384 million euros) compared to the same period last year.

According to DJV, the UK remained the favorite destination for venture capital investment in Europe, taking 35 percent of overall investment in the first half of 2011. UK-based companies raised 766 million euros through 119 deals, a 4 percent decline in capital invested and a 29 percent decline in deal flow compared with the same period last year.

France came in at second place, yet it also witnessed a decline in investment and activity in the first half of this year. The same was true for Germany.