International Venture Capital Investment Continues Decline, Down 63% in Q2
July 23 2009 - 12:00AM
PR Newswire (US)
Dow Jones VentureSource: Non-U.S. Investment Falls to $1.46
Billion, Lowest Since 2003; Europe Sees Record-Low Investment &
Deal Count LONDON and SHANGHAI, July 23 /PRNewswire/ -- Venture
capital investments in the international markets continued to slow
in the second quarter of 2009, according to new global data from
industry tracker Dow Jones VentureSource. Investors put $1.46
billion to work in 250 deals for emerging companies in Europe,
Canada, Israel, China and India in the second quarter, less than
the $1.99 billion invested in the first quarter of 2009 and down
63% from the $3.95 billion invested in 452 deals during the second
quarter last year. This marks the lowest non-U.S. quarterly
investment total since at least the height of the tech boom fallout
in 2003. "We're seeing a clear trend indicating more later round
deals as venture investors work to sustain their current portfolio
companies," said Jessica Canning, Director of Global Research for
Dow Jones VentureSource. "As the IPO timeframe increases, investors
are finding it more challenging to maintain their stakes in current
investments." In the U.S., venture investors put $5.27 billion into
595 deals, a noticeable improvement over the first quarter but
still down compared to a year ago. Investment in Europe* Lowest on
Record According to Dow Jones VentureSource, Europe garnered $831
million (620 million euros) in 156 deals during the second quarter
of 2009, down 47% from the $1.58 billion (1.07 billion euros) put
into 272 deals during the same period in 2008. This marks the
lowest deal count and investment total for Europe since Dow Jones
VentureSource began reporting on the region in 2000. Like the U.S.,
Europe's information technology (IT) industry is seeing the most
significant declines. The industry suffered its worst quarter on
record with $287 million (214 million euros) invested in 72 IT
deals in the second quarter, down 67% from the $861 million (580
million euros) put into 144 deals last year. Within IT, the
software sector fared the worst, attracting just $83 million (62
million euros) in 24 deals, the lowest totals on record for the
segment. Investors put $259 million (193 million euros) into 29
healthcare deals in the Europe region during the quarter, a 22%
decline from the second quarter of 2008 when $270 million (182
million euros) was put into 43 deals. Even Europe's energy and
utilities industry took a hit in the second quarter with investment
declining 84% to just $55 million (41 million euros) in 10 deals.
"Global investors are remaining cautious due to continued
uncertainty with the economy,: added Ms. Canning. "Even the
traditional sectors, like IT and HC, are not attracting as large a
share of the overall investment as they once did." Deals Get
Smaller Everywhere According to the data, the size of venture deals
fell throughout the world in the second quarter of the year. In
Europe, the median size of a venture capital deal dropped 13% from
the $3.4 million (2.3 million euros) in the second quarter of 2008
to $3 million (2.2 million euros) in the most recent quarter. In
Israel, the median deal fell 32% in size from $6 million a year ago
to just under $4.1 million in the most recent quarter. The median
sizes of deals in India and Canada stood at $4.2 million and $3.2
million, respectively, in the first half of the year. The median
deal size in U.S. dropped 18% from $8 million a year ago to $5
million in the most recent quarter. In China, the median deal size
stood at $7.5 million after the first six months of 2009. Further
Country Perspectives; France, Switzerland See Growth -- In the
second quarter, the United Kingdom was the second-favorite
destination for venture capital, behind the U.S. Venture
capitalists put $292 million (218 million euros ) into 41 U.K.
deals, down 12% from the $330 million (246 million euros) put into
77 deals during the same period last year. -- In China, $282
million went into 33 venture deals during the second quarter, an
80% drop from the $1.39 billion invested in 76 deals during the
second quarter of 2008. Notably, the country's healthcare industry
recorded another strong quarter with $65 million put into six
deals. -- Venture investment in France rose 14% from $184 million
(124 million euros) invested in 50 deals last year to $209 million
(156 million euros) in 57 deals during the most recent quarter. --
Israel-based companies garnered $191 million in 37 venture deals,
67% less than the $570 million invested in 62 deals during the same
time in 2008. -- In Switzerland, investors put $92 million (69
million euros) into three large deals, a big increase from a year
ago when only $12 million (8 million euros) went into five deals.
-- In India, venture capitalists invested $89 million in 12 deals
in the second quarter, 66% less than the $260 million the country
garnered in 20 deals last year. -- Capital investment in Germany
dipped to $66 million (49 million euros), down from $496 million
(334 million euros) a year ago. -- Canada garnered $65 million in
venture capital with 12 deals completed in the second quarter, less
than half the $142 million put into 22 deals in the second quarter
of 2008. -- In Sweden, venture investment fell to $50 million (37
million euros) in the most recent quarter compared to $108 million
(73 million euros) invested in the second quarter last year. *All
Europe investment figures based on weighted conversion rates of
1.48521 (2008) and 1.34017 (2009) For more information or to
arrange a personal demonstration of Dow Jones VentureSource, visit
http://venturecapital.dowjones.com/ or call +1 877 633 8663 (in the
U.S.) or +44 (0) 203 217 5176 (in Europe). You can follow exclusive
reporting on this story at http://www.twitter.com/djventurewire .
The investment figures included in this release are based on
aggregate findings of Dow Jones proprietary global research. This
data was collected by surveying professional venture capital firms,
through in-depth interviews with company CEOs and CFOs, and from
secondary sources. These venture capital statistics are for equity
investments into early-stage, innovative companies and do not
include companies receiving funding solely from corporate,
individual, and/or government investors. No statement herein is to
be construed as a recommendation to buy or sell securities or to
provide investment advice. Copyright 2009, Dow Jones VentureSource.
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