For the first time since 2000, annual investment in European venture-capital-backed companies held steady, with ?3.5billion invested in 2004?nearly the same amount that was invested in 2003. However, deal flow for the year decreased to 1,026 rounds?a 20% drop in activity from 2003? according to the European Venture Capital Report released by VentureOne and Ernst & Young.
In the UK, as Stuart Watson, leader of Ernst & Young's Venture Capital Advisory Group explains the strong rise in Q4 of value of deals done ? up from ?212 million to ?285 million is encouraging, although 2004 as a whole showed a modest decline of 2.5% to ?1,085 million. The number of deals in the UK also showed a fall from 336 in 2003 to 286 in 2004.
Watson comments,? The UK venture capital market showed signs of recovery by the end of 2004. Investors are working hard to pick real winners, particularly in the biopharma and other healthcare sectors. As a result we are seeing early stage investment showing strong growth and value per deal increasing as well. The froth has been blown off the market and quality not quantity is showing through.?
Taking the lead from the US?
?Some of the factors which contributed to recent growth in US venture capital investment are now being observed in Europe,? said Watson.