Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.
So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising.
With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet.
I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.
Just saw the Dow Jones Venture Source report on venture investing in Europe in Q1 2010. The numbers are no different from what we are seeing out there in the market. Financing is available for the super great opportunities which are few and far in between but firms with interesting solutions and medium growth trends are still finding it hard to gather the financial resources.
As per the report, Q 2010 saw 212 deals at an aggregate of €777 million which was down 10% from the €861 million invested in Q1 2009. While IT investments were up 12%, this was largely due to semiconductor investments.
What I thought interesting was the rise in investment in business and financial services. The numbers how a 91% increase from €58 million to €111 million, in a total of 37 deals. BFS has actually grown from 7% to 14% of total venture investment in Europe.
The data says that the average deal size has grown from €2.06 million to €2.25 million. Frankly I would have thought the deal size would be larger as VCs moved towards more growth capital kind of investing. The disconnect I think is that the opportunities being evaluated fall into the growth bracket in terms of their size, revenue growth and profit levels but the investments are still at VC levels.
The best part of the story – UK remains the favourite destination for capital flows. In fact flows have increased from 24% of total European VC investment to 42%! That translates to €327 million in 68 deals. Germanic investment has also increased from 10% to 15% i.e. €117 million in 39 deals. The French meanwhile have seen a significant drop in percentage terms.
In absolute numbers Sweden and Netherlands have had a great year – Sweden €64 million in 14 deals up from €8 million in 8 deals and Netherlands €71 million in 8 deals up from €19 million in 6 deals.
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