UK, EU venture capital money dried up in 2008 as China wooed investors: research

The amount of money handed out through venture capital investments in Europe fell 15% to $6.5bn through 2008, according to Dow Jones‘ regular VentureSource report. Investors backed 20% fewer deals at 881. That’s the lowest since VentureSource began tracking in 1999, and it worsened as the year drew on – Q4 investments were 38% down on the year before at $2.1bn, a four-year low.

UK investments were down 24% to $1.9bn, the number of deals sinking 23% to 258 – and Q4 was down 54%, a seven-year low. In Sweden, by contrast, VC deals grew by a third to total $496m in 63 deals. Europe was dragged down by 26% fewer investments in IT, which slowed to record-low levels in the second half of the year.

The US got the lion’s share of investment at $28.8bn and VC hand-outs outside the US increased five percent to $13.4bn but, as borne out by the European slide, it’s mainly thanks to emergence of China, where investments doubled to $4.2 bn. In contrast, China saw 60% more IT investments. Release.

Other recent estimates give a rounder picture…
LibraryHouse, before it collapsed itself thanks to the downturn, said investments fell by a big 69% between Q1 and Q2.
As for mergers and acquisitions, PriceWaterhouseCoopers this week said the value of European media acquisitions shrunk by two thirds in the 2008 year on which Ascendant focuses, as finance dried up.
A contrarian report from corporate finance advisor Ascendant said the amount of investment finance going in to UK and Irish technology companies last year was the highest since 2001, and even 15% more than 2007.

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