"The venture capital industry continues to rapidly globalize as investors are eager to find and tap new areas of innovation, especially in emerging economies like China and India," said Jessica Canning, Director of Global Research for Dow Jones VentureSource. "What's most notable, is that the growth in international investment is not being fueled solely by information technology (IT), which is traditionally the sweet spot for venture capitalists, but also by energy-related investments. Investments in energy totaled nearly $1.4 billion in 2008 and now account for more than 10% of international venture investment. Much of this can be attributed to the global spike in energy prices we saw in 2008 and the venture community's championing of renewable and clean energy technologies."
Europe Overview
According to VentureSource, Europe saw a late-year pullback in venture investment which led to an overall annual decline of 15% as investment fell from $7.6 billion in 1,107 deals in 2007 to $6.5 billion in 881 deals in 2008. This marks Europe's lowest deal count since VentureSource began tracking the region in 1999. Much like in the U.S., Europe started off with a strong first quarter, only to see investments and deals slide downward over the course of the year. The region ended the year on a low note as investment fell 38% from $2.1 billion in the fourth quarter of 2007 to $1.3 billion in 2008, its lowest quarterly total in more than four years.
Specifically, Europe's IT industry saw its overall investment slide 26% from $3.4 billion invested in 560 deals in 2007 to $2.5 billion in 410 deals in 2008. The majority of this decline was in the last six months of the year as the number of IT deals and amount of investment reached their lowest levels on record in the third and fourth quarter.
Likewise, the data showed a late-year slowdown in health care deals and investment in Europe. Venture capitalists invested $1.8 billion in 215 health care deals in 2008, down 28% from the nearly $2.5 billion the region saw invested in 245 such deals in 2007. Both the decline in health care and IT investment in Europe closely mirror trends seen in the U.S. in 2008.
One of Europe's few bright spots was a surge in energy and utilities investment. The data shows that venture capitalists put a record $816 million to work in 59 of these deals in 2008, up 89% from the $431 million invested in 52 such deals in 2007.
The median amounted invested in a venture capital deal in Europe reached a record $4 million in 2008.
By Major European Country
* In the United Kingdom, VC investment fell 24% from $2.5 billion invested in 337 deals in 2007 to $1.9 billion in 258 deals in 2008. The last quarter of 2008 saw investment drop 54% from the prior year to $320 million, the lowest quarterly total since 2003.
* For the first time since 2003, Germany outpaced France as the second-most popular destination of venture capital in Europe with $1.2 billion invested in 160 deals.
* France saw its annual investment slide 29% from $1.4 billion in 2007 to just over $1 billion in 2008 as the number deals completed fell from 239 to 188.
* Capital investment in Sweden grew 33% in 2008 as $496 million was invested in 63 deals.
* In Denmark, venture investment fell only 6% from $308 million in 2007 to $289 million in 2008 even though the country saw its annual deal count plummet from 62 to 28.
* The Netherlands saw its annual venture investment fall 34% from a record $376 million in 2007 to $249 million in 2008.
