Venture capital investment experienced a weak quarter at the end of 2012 as it fared badly against the same period in 2011.
A fall of 26 per cent in capital and 22 per cent in deals was felt in the last three months of 2012, new figures show.
Findings from Dow Jones VentureSource shows that Europe-based companies raised €967 million (£826 million) from 233 venture capital deals.
However, the median size of a venture capital deal in 2012, the survey reveals, was €1.9 million, up from the €1.6 million reported in 2011.
Anne Malterre, European research manager at Dow Jones VentureSource, says that with M&A at its lowest level since VentureSource began recording data in Europe back in 2000, investors appear ‘trapped’ in current investments.
Firms now feel the need to wait longer to recoup financial returns, she adds, while at the same time lacking funds to fuel new ventures.
Further results from the report finds that 33 European venture-backed companies were acquired during the final three months of 2012. This compares unfavourably with the 45 noted during the same period in 2011.
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When evaluating the whole year, the VentureSource study found 145 businesses exited via mergers and acquisitions, a fall of 30 per cent from 2011 numbers. Those deals brought in €4.7 billion representing an even bigger fall from the €8.6 million garnered in 2011.
However, Malterre says, ‘The renewed trust in early-stage companies and the consumer services industry are positive signs.
‘Due to the growing interest in social media, online shopping and entertainment, the industry should remain attractive in 2013 provided it can transform that appetite into revenues.’
Further results from Dow Jones VentureSource:
- During 2012 16 VC-backed firms went public, up from 15 in 2011
- Some 67 per cent of deals in Q4 2012 went to early stage companies
- Second round deals accounted for 19 per cent of deal flow and 24 per cent of capital, down from 20 per cent and 27 per cent
- Later-stage deals fell from 24 per cent to 14 per cent but matched amount invested