France overtook the UK as leader for larger venture capital investments of over US$5m in Europe during the first half of 2013, according to an analysis by DFJ Esprit and Go4Venture Advisers.
Although the UK remained the largest country by value, the scarcity of follow-on funding issue was exposed as France overtook the UK in number of larger venture capital investments for the first time and Germany also made up ground.
There were 28 deals worth over UK$5m in France in H113, compared with 25 in the UK and 18 in Germany, Austria and Switzerland, aka the DACH region. The UK figure fell from its historical annual rate of 85 per annum.
Despite the UK losing its lead in larger follow-on deals, of the US$1.8bn invested in European venture deals in 2013 to date, the UK holds the total investment lead at US$656m followed by France (US$399m) and DACH (US$343m).
“The bulk of the financial returns in venture capital come from the big winners and the major investments that create these companies,” said Simon Cook, chief executive officer (CEO) of DFJ Esprit. “What this data clearly shows us is that Europe is successfully launching fledgling businesses but there is a scarcity of available capital for the follow-on funding to get them to the next stage. In Silicon Valley the ratio of large investment rounds compared with smaller ones is over 1 to 1 – in this latest data for Europe it is less than half that level.
“From a geographic point of view, the UK is often seen as the US gateway into Europe and many of the leading venture capital (VC) funds in London have strong US links. But UK’s historical position is under threat as governments across Europe use incentives to stimulate innovation and growth. The UK needs to act now to maintain its overall lead within Europe or risk being overtaken.”
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