Venture capital investment into European companies experienced a quarter over quarter increase, while exits for European venture-backed companies improved on Q1 2013.
However, during the first half of 2013, initial public offering (IPO) and merger and acquisition (M&A) activity declined in contrast to the same period in 2012.
A total of 12 European venture capital funds accumulated EUR890m in Q2 2013, an increase of 17 per cent in amount raised from the prior quarter albeit with a 14 per cent drop in the number of funds.
In contrast with Q2 2012, the number of funds fell by 25 per cent while the amount raised declined by eight per cent.
The largest fund of the quarter was Unilever’s Venture II fund, which raised EUR350m, accounting for 39 per cent of the total amount raised for Q2 2013.
For the first half of 2013, venture capital funds raised a total EUR1.65bn across 26 funds, down 15 per cent and 19 per cent from the first six months of 2012 respectively.
European companies raised EUR1.3bn for 354 deals during Q2’13, a 16 per cent rise in the number of deals completed and a 24 per cent rise in capital raised from the previous quarter.
In contrast with Q2‘12, deal flow experienced a seven per cent uptick, while investment declined by five per cent.
Venture activity remained steady during the first six months of 2013 in contrast with the first half of 2012: 659 deals were completed for EUR2.4bn, a two per cent rise and one per cent fall from respective 1H’12 figures.
The consumer services sector received the largest allocation of investment in Q2’13 (32 per cent), accumulating EUR423m through 92 deals, an increase of 58 per cent from Q1’13 in capital raised and 35 per cent in the number of deals.
Healthcare overtook IT to take second position in terms of equity financing, taking a 31 per cent share of all Q2’13 investment. The sector raised EUR418 m across 72 deals, up 73 per cent and 26 per cent respectively from Q1’13 figures.
The business and financial services sector secured third position, gathering a 16 per cent share of the total amount invested during Q2’13. The sector received EUR213 m across 70 deals, an increase of 59 per cent in deal flow and 83 per cent in capital raised from Q1’13.
The IT sector saw its share of investment fall from 30 per cent in Q1’13 to 13 per cent in Q2’13. Companies in the sector completed 76 deals for a total of EUR174 m, a drop of 20 per cent in deal flow and 45 per cent in capital raised from the previous quarter.
Germany was the favoured destination for equity financing in Europe in Q2’13, taking a 20 per cent share of all investment into European VC-backed companies. The country received EUR273m for 67 deals, up 73 per cent and 37 per cent from respective Q1’13 figures.
The UK fell to second, raising EUR211 m for 77 deals, down 44 per cent in capital invested despite a 13 per cent uptick in deal flow. The allocation represents a 16 per cent share of all investment for Q2’13 and is the country’s lowest quarterly figure since Q2’09.
France placed third raising EUR204m, a 15 per cent share of Q2’13 European investment. Despite deal flow rising by four per cent from Q1’13, the country’s investment allocation fell by 16 per cent.
Russia secured fourth position raising EUR120m, EUR100m of which went to Moscow-based KupiShoes in a second round of financing. The country’s allocation represents a nine per cent share of Europe-wide investment.
M&As of venture-backed companies in Europe rose by 13 per cent from Q1‘13 with 34 deals completed during Q2’13, though the figure fell 19 per cent from the 42 that took place during Q2’12.
The largest M&A of the quarter was Okairos Srl, which was acquired by GlaxoSmithKline for EUR250m.
A total of 64 M&As have been completed for venture-backed companies in Europe during the first half of 2013, down 16 per cent from the 76 completed during the first six months of 2012.
Three venture-backed IPOs took place during the quarter, up from a single IPO during Q1’13 and level with the number completed in Q2’12.
Netherlands-based Prosensa Therapeutics, a provider of ribonucleic acid-modulating (RNA-modulating) therapeutics for the treatment of genetic disorders, completed the largest venture-backed IPO in Europe during Q2’13, raising EUR60m for its Nasdaq listing at the end of June.
