Some great information from the BVCA and Winston & Strawn on the emerging Venture Debt industry in Europe. If you don’t know what venture debt is, this is a great primer. If you do know what venture debt is and want to geek out over the data, this is a great source.
“Through one of the very first quantitative studies on venture debt in Europe we found that from 1999 to the end of 2009:
The amount of venture debt investment peaked in 2007 at £309m
invested in 123 deals. Venture debt as a percentage of venture capital
was 10.2% in the UK and 5.8% in Europe in the same year, its highest
on record.
• Close to 400 companies have received venture debt from UK venture
lenders with £425m invested into UK companies, £362m into
European companies and £199m into the rest of the world (mostly in
Israel).
• The average size of a venture loan is £2.1m with a range of £860,000
to £9m. Companies in the internet, biotech and semiconductor
sectors had the highest average loan size.
• Companies raising their second round of equity were the number one
recipient of venture debt. Only 18 investments have been in a first
round.
• 33% of companies in one venture lenders portfolio had a turnover of
less than €1m at the time of receiving a loan whereas another 41%
had a turnover greater than €5m.
- The amount of venture debt investment peaked in 2007 at £309m invested in 123 deals. Venture debt as a percentage of venture capital was 10.2% in the UK and 5.8% in Europe in the same year, its highest on record.
- Close to 400 companies have received venture debt from UK venture lenders with £425m invested into UK companies, £362m into
- European companies and £199m into the rest of the world (mostly in Israel).
- The average size of a venture loan is £2.1m with a range of £860,000 to £9m. Companies in the internet, biotech and semiconductor sectors had the highest average loan size.
- Companies raising their second round of equity were the number one recipient of venture debt. Only 18 investments have been in a first round.
- 33% of companies in one venture lenders portfolio had a turnover of less than €1m at the time of receiving a loan whereas another 41% had a turnover greater than €5m.”
You can download the excellent full report The Rise of Venture Debt in Europe right here.
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Though venture debt is much more appealing to banks, lenders still need to be wise about who they loan their money to. It sounds like it goes without saying, but if they guy getting the loan has no proven track record of starting a business, no matter how dependable, the company he starts can still go belly-up.