Start-ups win as European VC Industry loses

start-ups win and european vc industry loses Where the European venture capital industry shows signs of being hit by the global economic slowdown, start-ups defy the crunch.

According to Dow Jones’ Quarterly European Venture Capital Report, the amount European venture capitalists invested in the first half of 2008 fell to € 858 million, or 167 deals. This is a 35% drop from the €1.33 billion invested in 286 deals over the same period last year.

Geographical discrepancies in Europe were also reported; Britain, deemed a leader in European technology innovation, saw venture investment fall 49 percent last quarter, while Germany was the leader in investment for the first time since 2001.

The results, it is suggested, are the reflection of the situation in the US, where acquisitions are slow and investors concerned they will be unable to cash out of their investments through public stock offerings.

The Information technology sector was hit hardest, with a 46 percent decline in the number of deals completed. The software sector, in particular, suffered with just 34 deals concluded, and €168 million invested.

But it is not all bad news, Dow Jones reported, pointing out that the European VC industry financed the highest percentage of early-stage companies since 2001. Seed or first rounds accounted for 44 percent of venture deals in the first half of the year, indicating that things may be looking up in the coming years.