VC investment halves in 2001

A new report highlights healthcare and biotechnology as the two bright performers in an otherwise poor year for VC investment.

Ernst & Young and VentureOne have published their first joint global venture capital survey which reports venture capital investment of E9.6bn for 2001. The figure, raised across 1,801 deals, is 50 per cent down on 2000 investment.

The report further emphasised previous surveys which have shown the US VC sector to have suffered more than Europe. European deals fell by a third, whilst the number of transactions carried out in the US fell by 52 per cent.

Only two sectors witnessed an increase in investment across the year. Biopharmaceutical firms raised a total of E1.7bn in 160 deals, up 13 per cent on 2000. These gains drove up the healthcare industry's share of the venture capital market from 10 per cent in 2000 to 21 per cent in 2001.

European investment continues to focus on the UK, Germany, France, and Sweden. The ‘big four’ were able to increase their share of the European market from 71 per cent in 2000 to 76 per cent last year.

Unsurprisingly, technology investments were hard hit by a broader decline in the technology sector. Software investment fell 56 per cent to E2.3bn, while general IT investment fell 52 per cent to E5.1bn. But, as in the US, some of the deepest declines occurred in information services and consumer and business services. European investment in these areas fell 79 per cent and 66 per cent, respectively.