In most markets outside the US the fourth quarter of 2009 was the best quarter of the year for venture capital investment, but it did little to boost the year’s annual totals.
In the fourth quarter, venture capitalists invested USD2.5bn in 396 deals in Europe, Canada, Israel, China and India, a 24 per cent drop from the USD3.3bn invested in 472 deals during same period last year, according to data from Dow Jones VentureSource.
Throughout 2009, investors put USD8.2bn to work in 1,391 deals outside the US, a 47 per cent drop from the USD15.5bn invested in 1,932 deals in 2008.
“The collapse of the global financial markets in 2008 took its toll on venture investment last year, causing annual investment in every market around the world to plummet,” says Jessica Canning, global research director for Dow Jones VentureSource. “The one positive sign going into 2010 is that the fourth quarter was strongest of the year for global investment.”
In the US, venture investors put USD6.3bn to work in 743 deals in the most recent quarter, a slight up tick from the same period in 2008. Throughout 2009, venture capitalists invested USD21.4bn into 2,489 deals for US companies, a 31 per cent drop from 2008.
In 2009, venture capitalists invested USD4.4bn (EUR3.2m) in 916 deals for European companies, down 41 per cent from the USD7.4bn (EUR5.1bn) put into 1,234 deals in 2008. According to Dow Jones VentureSource, 2009 was the worst year for venture investment into European companies since the firm began tracking the region in 2000. In the fourth quarter, venture investors put USD1.3bn (EUR911m) into 252 deals, a 28 per cent drop from the USD1.8bn (EUR1.2bn) put into 321 deals during the same period last year.
“In Europe, venture capitalists opened their wallets a little wider in the fourth quarter," says Arno Castanet, research manager in Dow Jones VentureSource’s London office. “But with investors’ capital sources – fundraising and liquidity – still tight, entrepreneurs will continue to face intense competition for capital in 2010.”
The healthcare industry attracted the largest proportion of investment in 2009, collecting USD1.5bn (EUR1.1bn) in 192 deals, down 29 per cent from the USD2.1bn (EUR1.4bn) put into 284 deals in 2008. Biopharmaceuticals companies took the biggest slice of the industry’s capital, raising USD1.1bn (EUR771m) in 103 deals, down 25 per cent from the previous year.
The information technology industry garnered USD1.1bn (EUR778m), a 45 per cent drop from the USD2bn (EUR1.4bn) collected in 2008 and the first time on record that the industry’s annual total was less than EUR1bn. Despite investment into software companies dropping more than 50 per cent, software continued to attract the largest proportion of the IT industry’s capital, collecting USD471m (EUR340m) for 167 deals.
Investment in Europe’s energy and utilities industry was halved as the industry raised USD497m (EUR359m) for 69 deals. In 2008, the industry collected USD984m (EUR675m) for 81 deals. The renewable energy sector accounted for all but four small deals in the energy and utilities industry during the year.
According to the data, the size of venture deals has decreased in all markets around the world since 2008. The median size of a venture capital deal in Europe dropped 24 per cent from 2.9m (EUR2m) in 2008 to USD2.2m (EUR1.6m) in 2009. Mainland China had the highest median deal size of any region with USD7m in 2009, a 13 per cent drop from the USD8m median in 2008.
India saw the most dramatic drop as the country ended 2009 with a USD4m median, down 44 per cent from 2008. Canada’s median dial size fell almost one-third to USD4.1m and Israel’s median dropped almost 20 per cent to USD4.5m.
The median round size in the US was USD4.7m, down from USD6m seen in 2008.
