Venture capitalists invested £1.2 billion through 274 deals in the UK during 2011, marking a 36 per cent decline in value and a 17 per cent drop in deal volume, research finds.
Venture capitalists invested £1.2 billion through 274 deals in the UK during 2011, marking a 36 per cent decline in value and a 17 per cent drop in deal volume, research finds.
Despite the dip, the UK remained the busiest destination for venture capital investment in Europe with rivals France, Germany and Sweden all falling below the £1 billion level, according to Dow Jones VentureSource.
As a whole, European levels of investment fell by 14 per cent in terms of invested amount and 19 per cent in deal flow, the lowest figures since VentureSource began tracking the region in 2000.
Anthony Sheldon, research manager at Dow Jones VentureSource, comments, ‘Venture capitalists are having difficulty raising funds as the Euro crisis weighs on limited partners’ minds and fewer companies are finding exits.
‘This has naturally led to slowdown in investment. With less capital flowing into venture firms, there’s less to invest in start-ups.’
Fourth quarter figures for 2011 represent the weakest period during the year, with a 43 per cent decline in deals, and a 38 per cent decline in investment compared to the same quarter in 2010.
Throughout Europe in 2011, 14 venture-backed companies went public through an initial public offering (IPO), raising £582 million. Despite the amount of IPOs being lower than 2010, the capital raised through the exercise increased by 59 per cent.
The statistics also show that, for the first time since 2001, the consumer services industry raised more venture capital than the information technology (IT) sector. A total of £921 million from 223 deals was raised, surpassing the £516 million from 270 deals for IT.
