Library House recently compiled figures for Q2 2008 European venture capital investment. The quarter saw VC investment fall significantly across Europe, from €1.43 billion last quarter, to just €949 million this quarter, representing a drop of 33.6%. This is also much lower than the corresponding quarter last year, when €1.3 billion was invested.



The number of deals across Europe during the quarter was also down on previous quarters. There were 357 deals in Q2 2008, compared to 447 in Q1 2008, representing a drop of 20% on the previous quarter. This was also 13% less than Q2 2007, which had 410 deals.

However, it is not all doom and gloom. Most VC investors are up beat about the current venture market, but uncertain economic times have been delaying some investment decisions, especially for first rounds. Many of the investments in the quarter were directed towards follow on investment rounds, in more established companies where capital has already been committed. It seems a short spell of risk aversion and consolidation is taking place. Deal activity so far in Q3 2008 indicates a bounce back in the current quarter could well be on the cards.

Top 5 deals roundup

Top deal of the quarter was UK-based Apatech, one of the world leaders in synthetic bone graft technologies, receiving a 5th round funding of €29.4m on the 16th of June. The second biggest deal was a substantial first round of €28m to a pioneer in Internet retail, Nedtherlands-based Netretail Holding, in a syndicated deal involving 3TS Capital Partners and Intel Capital. Other deals making up the top 5 of the quarter include a second round €27.5m deal for biopharmaceutical firm Apogenix, a €25.9m 4th round funding for Israel-based Vascular Biogenics and a €25.4m 6th round for the well established UK-based Icera Semiconductor.

Top 5 exits roundup

Biggest exit was the €150m sale of Germany-based cancer drug developer U3 Pharma, to the Japan-based Pharma Daiichi Sankyo. Second was the €101.1m buy-out of another Pharma focusing on cancer treatments, UK-based PIramed acquired by Roche. Third was the €38.7m acquisition of Tech Track featured Sarian Systems, a UK manufacturer of mission critical IP routers, acquired by Digi International, and fourth was the €31.5m sale of mobile data backup solutions company ZYB to Vodafone. The fifth biggest exit was JacobsRimell, which was sold to Amdocs for €28.6m.