After a bullish year in 2006 VC investment slowed down in the first quarter of this year, a new report shows.
Research conducted by Ernst and Young shows that both the number and overall value of VC deals decreased by 11% when compared to the same period last year.
The first three months of 2007 produced €1.07bn (£728m) of investment spread out over 207 deals, the report found.
However, technology entrepreneurs can feel more positive than other sectors as there were nine percent more deals and an increase of six percent in terms of capital invested in companies when compared to the first quarter of 2006.
Also, it appears that companies looking for further investment are doing well as later-round financings have risen to their highest level in over a year and now make 40% of all VC deals.
Second funding rounds are also 21% up on 2006 and were worth €257m (£174m) in total.
The report’s authors also say that the median round size is at a new high reaching €2.7m (£1.83m) overall.
“The continued growth in round size, especially in second and later rounds, indicates that investors are providing the most promising portfolio companies with the resources needed to progress along the path to exit,” said John de Yonge, global research director at Ernst & Young.
“Last year saw the most venture-backed initial public offerings in Europe in six years and steady acquisition activity.
“Investors are focusing greater capital and attention on the subset of companies with the most potential to take advantage of the supportive exit climate in the near term.”
© Crimson Business Ltd. 2007
