Investment in UK companies by venture capitalists (VCs) rose to £1.4bn in 2006 a big rise from the year before, new research suggests.
Researched conducted by Library House shows that VCs invested 27% more in UK companies last year than in 2005.
The findings have been published in the ‘Funding Growth in a Changing World’ report, commission by UBS, which examines every company in the UK that is venture-backed.
It uncovered three main reasons for the rise:
Venture capital investors have increasingly recovered their confidence since the low ebb of 2002, improving the top level numbers;
2005 saw significant fundraising activity by venture capital firms which have consequently been keen to invest in 2006;
Government policy has helped improve the UK venture capital market with, regional venture capital funds and other public sector backed funds making an important contribution.
Doug Richard, chairman of Library House, said: “2006 has been a fantastic year for UK venture activity yet, the persistence of a gap between the vibrancy of venture capital in the UK and Europe versus the US suggests the existence of structural problems on this side of the Atlantic.
“The most pressing of these problems is the lack of proof of concept/investment readiness funding in the UK and Europe which results in a smaller pool of investable opportunities here.”
© Crimson Business Ltd. 2007