|Thursday, November 23, 2006|
||Created by: Tornado Staff
The magic 4 billion mark
For the first time since 2002, annual venture capital investment in
European and Israeli technology companies has topped €4 billion.
Tornado Insider Research Online Data service shows that year-on-year
funding hovered around €3.9 billion in the past two years. 2003
investment totaled €3.1 billion, just half the amount reported in 2002.
Deal activity in 2006, however, is still well behind. The €4.1 billion
raised so far in the year was secured by just 706 enterprises, a whopping 162
deals short compared to 2005. Even during the slump in 2003, 806 deals were
secured. The high amount raised in 2006 is therefore the result of an impressive
increase in average deal size. To date, 2006 can boast an average of
€5.8 million - compared to €4.5 million in
2005, €4.3 million in 2004 and €3.8 million in 2003.
As always the UK claims top position in the country rankings for tech investments. However, with almost €1 billion raised the country's contribution to total investment in 2006 is down from its year-on-year average of around 30% to a mere 24%. In addition, the number of UK fundings has dropped from 309 in 2005 to 213 so far in 2006. Notably, the UK can boast an above average percentage of early-stage investments: 35.7% of all deals. France, Israel and Germany are ranked 2nd, 3rd and 4th respectively in 2006. France is showing hardly any movement in percentage of early-stage deals, with 21.4% - 24.2% of all deals falling within that category since 2004. Israel is up from 23.4% in 2005 to 30.4% in 2006. Germany has upped its contribution of early-stage funding from 23% in 2005 to 33% this year.
As reported previously in this newsletter, the data show a shift in industry focus away from Biotechnology & Healthcare (B&H) to ICT-related companies. Current figures in 2006 show that 26.2% of all investments are in B&H (2005: 29.3%), with Software (24.2%) and Communications (14.3%) coming next. Internet companies are showing a big jump upward, reporting 9.2% of all 2006 deals – up from 5.8% in 2005.