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Good news – venture investment is back!

7 comments

It appears the sap is rising. Definite signs of life among the venture community according to these numbers from Calibre One’s Venture Index. This records publicly available records of venture investment in the US and Europe.

Value of investments in reported deals in Q3 09 reached the highest level since Q1 08 and were almost double the level of Q4 08 which has been the lowest quarter in recent history.

VC Reported Investment US & Europe. Past thre years.

VC Reported Investment US & Europe.

The story in Europe is positive too, (anyone from the US can just ignore this chart apart from possibly Fred Wilson, Mark Suster and Dave McClure).

VC Reported deals in Europe, country by country

VC Reported deals in Europe, country by country

The UK and France have underpinned the European venture scene although France has been remarkably consistent throughout this period.

Reported deals, UK and France 2007-2009

Reported deals, UK and France 2007-2009

As many have pointed out, the amount of money being invested in deals has masked the lack of new deals as investors focus on supporting the portfolio companies that they think can impact positively on their portfolios. The evidence from the latest figures, with other anecdotal evidence, suggests that more deals, (by implication new deals), are being done. As reputable angel groups and super-angels have also been active during this time, this is all encouraging news for the industry.

Number of deals has been increasing steadily in 2009

Number of deals has been increasing steadily in 2009

Whilst the IPO and M&A markets have not been very active generally, the quarter also saw some interesting deals: eBay selling Skype; Dell buying Perot Systems;  123 Systems had a strong NASDAQ IPO; alongside some more modest, but nevertheless significant, from a VC perspective, exits – most recently announced acquisition of Gomez by Compuware for $295 million.

One year on from Sequoia’s RIP Good Times presentation, it looks like the tide may be turning.

NB: I spent the best part of 6 years trying to work out how you get the perfect set of VC numbers and came to the conclusion that you can’t – not if you want to stay in business anyway. So all ‘numbers’ come with mandatory health warnings but you can tell things from trends as long as methodologies stay relatively even. You can get all of this quarter’s numbers in text format here, aggregate numbers from previous quarters here and download the Calibre One index in PDF here.

If you want to add to the deal info, feel free to get in touch.

In fact, our good friends at Timetric spent some time playing with this data at the weekend and have now put some excellent interactive charts together. You should take a look at their report here. Have a play with the data. Some of the charts they produced are below.

This is the mean size of venture deals and shows North America consistently delivering larger deals whilst the UK generally outperforms Europe.

Plotting the value of deals in North America vs Europe and number of deals in North America vs Europe highlights the disparity between the two even further.

North American VC has invested between 2x and 5x per deal on average compared to Europe. Only in the last two quarters of 2008 did the number of European deals exceed the number of deals in North America. (Although this is not entirely surprising. Historically, US investors have tended to be far more extreme in their highs and lows).

Just to finish on a slightly more parochial note, we considered the contribution of UK venture capital to European venture investment and you can see the importance of the UK venture ecosystem to Europe. For many years, the UK has seen about one third of all venture investment in Europe. The huge drop in Q1 2009 was clearly a concern for all but seems to have been a temporary issue.

Last quarter’s data set.

Calibre One report.

Timetric interactive charting.

7 responses to “Good news – venture investment is back!”

  1. Finally!

    We at HireLabs were wondering when VCs will start coming to the table

  2. Errm, generally you have to get to their table in the first place but I think this is good news!

  3. Loving that interactive charting.

  4. Cheers! The underlying data’s at http://timetric.com/tags/thebln/ if you’d like to play with it yourself.

  5. This does not resemble the situation I have found. I have been fundraising for over a year and have a hugely disruptive idea but without any success. There is lots of talk about funds that are investing and everyone I speka to says they have funds avaialble but noone has given me a term sheet. I think this is because people are too afraid of what will ahppen going forwrad and they cannot price deals properly. The goverment have promised to fund the ventue industry but they should be fnidng entrepreneurs directly. None of the money that has been promised has been spent.

  6. Memi says:

    More important rs the allocation of investment between seed invetment and other rounds and also between technology companies and projects. I do not hold the statistics but i suspect that seed investments are minor (if any) and in evolving industry as cleantech seed investment are a must.

  7. Martin says:

    I’ve been fundraising for many years and 2009 can only go down as a record – for inaction. Far too many on the supply side are unwilling or unable to act, plenty of talk but very little action. Their focus is on supporting where they’re already invested. Those on the demand side remain in need, are keen to build strong businesses off the back of great ideas, yet the industry that’s suppose to support them simply can’t. The structure of trade is such that the supply side should have the critical mass to enable greater leverage from their backers but liquidity still isn’t there. Quantitative easing appears to have resulted in the Banks sitting on Gilts and cash to restore their own tier one Capital, rather than turning that into liquidity for industry. This industry suffers disproportionally as a result. It seems to me that until the Government acts on the lack of flow from their quantitative easing, gearing capital will remain stagnant and good businesses will languish.