Private Equity News & Analysis

Technology investment going strong

UK leads the way in record European technology investment says PwC’s Global Technology Industry Group.

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According to PricewaterhouseCoopers’ Money For Growth Report 2000, European technology investments reached a record of E11.5bn, a 68 per cent increase on the 1999 figure.

The data accumulated from almost 1,400 venture capitalists across 21 countries revealed that over 6,500 investments were made in technology companies during 2000. The report shows that the sector continues to be the largest industry grouping for investment, attracting 31 per cent of the total amount invested across all sectors in Europe.

On a country by country basis, the UK still leads the rest of Europe in technology funding with investment up at E3bn from E2.2bn in 1999. This is 26 per cent of the total amount invested in technology across Europe. France has overtaken Germany in second place, accounting for 21 per cent of the total while Germany's share, at 20 per cent, has remained constant over the two years.

The third annual report, which includes data based on EVCA's annual survey of pan-European private equity and venture capital on technology investments, also shows that the average deal size for technology was up slightly at E1.5m, but was still dwarfed by the US comparative figure of E18.5m.

But Keith Arundale, the director of the report, believes growth levels in technology venture capital investments in Europe are catching up with those in the US. This he says reflects “the lead Europe has over the US in hot technology areas such as 2.5G and 3G wireless, and optical technology'.

The study also shows that funds earmarked for technology investments are continuing to increase. E15.2bn, or 32 per cent of all European funds raised in 2000, is expected to be invested in early-stage and expansion stage technology companies. This is almost double the E8.4bn allocated to the sector in 1999.

The Global Technology Industry Group of PricewaterhouseCoopers concludes that despite the vast amounts of cash available, early stage technology companies will find it harder to attract funding. It argues that the global slowdown witnessed since the end of last year has seen venture capitalists in both Europe and the US return to basics, focusing on the hottest prospects which it calls the 'three M's' – management, money and markets.