In previous European Venture Intelligence articles we have focused on cluster activity around various European cities that have a particularly vibrant or active venture capital scene. Many of the venture backed company clusters tend to be sector focused, due to a mixture of historical factors, specific research strengths of local universities and corporations, and of course some cross pollination of ideas feeding further growth in aligned sectors.

Example clusters previously examined include Copenhagen in Denmark, with heavy investment in Healthcare and Life Sciences forming a significant part of the “Medicon Valley”, sometimes credited to research that began many years ago at the Carlsberg Breweries. The cluster in Helsinki, Finland has strong focus on wireless communications technology, attributable in part to Finnish corporations such as Ericsson and Nokia, and Cambridge is well known for particular strengths in Biotech owing in large part to the world class scientific research spinning out of the university.

So where are the top ten European clusters?

There are potentially several different measures for an innovation cluster, but the level of venture activity within metropolitan areas and associated science parks can be taken as a very good proxy. Library House data reveals that the top 10 European clusters in terms of the number of venture backed companies are:

1. London
2. Paris
3. Stockholm
4. Tel Aviv
5. Helsinki
6. Copenhagen
7. Munich
8. Berlin
9. Cambridge
10. Dublin

In terms of amount of venture capital committed the top ten clusters are:

1. London
2. Paris
3. Tel Aviv
4. Stockholm
5. Copenhagen
6. Cambridge
7. Dublin
8. Berlin
9. Helsinki
10. Munich

Both measures place London and Paris 1 and 2 respectively, but this is perhaps to be expected given their substantial populations. The others cities are jostling for position in each measure, but both lists maintain the same cities in the top ten rankings.

Generally venture clusters in populous areas like London and Paris differ from less populous clusters in that they have strengths in a mixed batch of sectors, with such large cities able to support several mini clusters. Additionally the Web sector tends only to be significant in such populous areas, where lower barriers to entry and sheer number of potential innovators means the sector is closely correlated to population.

As described previously, clusters with smaller populations tend to be focused on more specific sector strengths prevalent in their proximity. Analysis of these clusters has become widespread within development economics, particularly in the past decade, and clusters are widely regarded as means by which to improve regional competitiveness.  

Now it seems as though corporate acquirers are acknowledging the importance of clusters too, with one of the major factors cited by corporate venturing departments influencing company acquisition is strategic location of foreign hubs, particularly in R&D heavy industry. This is largely because much of a company’s value is embedded within the collection of skilled workforce, capacity to innovate, recruit and access to facilities.  

Given such observations, investors may be wise to pay close attention to the location of companies when considering their investments.

TVeez, the Israel-based provider of retail technology, has raised $15m (€9.7m) first round funding from Benchmark Capital and Giza Venture Capital. TVeez designs sales and marketing management systems, which enable retailers to analyse customer data and personalise digital advertisement content for individual users. The company had previously been funded by its founders.

WorkLight, the Israel-based developer of server-based software products for enterprise, has raised $12m (€7.7m) second round funding from Pitango Venture Capital and return investors, Genesis Partners, Index Ventures and private investor, Schlomo Kramer. WorkLight's software allows companies to securely scale Web 2.0 services for enterprise use. The funding is to be used to further the company's presence in North America, Europe and Aisa.

Lagan Technologies, the UK-based provider of software solutions for governments, has raised $10m (€6.4m) in a series D funding round led by BlueCrest Capital Finance. Lagan Technologies has developed a suite of software products for government use, including its enterprise case management software, which enables governments to make public services more efficient.

More companies' intelligence at www.libraryhouse.net

Sarian Systems, the UK-based manufacturer of IP routers, has been acquired by Digi International for $30.5m (€19.7m) in cash. The purchase price takes cash on Sarian's balance sheet, an estimated $2.5m (€1.6m), into account. Following the deal, Digi International anticipates that Sarian Systems will contribute revenue in the range of $23m (€14.8m) to $27m (€17.4m) for fiscal year 2009. Sarian will become a wholly owned subsidiary of Digi International.

InterCity Group, the UK-based support services business, has been acquired by London Property Maintenance for £5m (€6.3m). The deal has enabled London Property Maintenance to establish the business in the north west of England, and allows InterCity Group to grow as part of London Property Maintenance.

More companies' intelligence at www.libraryhouse.net

Cellectricon, the Sweden-based manufacturer of real-time cell-based screening devices, has appointed Jonas Ohlsson to the position of chief executive and president. Prior to joining the company, Mr Ohlsson held the position of chief executive at Mentice. Mr Ohlsson has extensive knowledge of the biotech industry, having held senior positions at PE Applied Biosystems, Kovalent and AstraZeneca.

Healthcare Brands International, the UK-based developer of OTC medicines, has appointed William Cotton as chief operating officer. Prior to joining the company, Mr Cotton spent 23 years at the Boots Company, during which time he held various positions including: managing director of Crookes Healthcare and managing director of Boots Retail International.

Eyeka, the France-based provider of online and mobile television media tools for business branding, has appointed Alexandre Olmedo to the position of chief executive, Eyeka Asia Pacific. Prior to joining the company, Mr Olmedo held positions at Streamezzo, PacketVideo Network Solutions and Alcatel-Lucent. Mr Olmedo is a director of the MEF Asian Board, the global trade association for companies across the mobile entertainment value chain.

More companies' intelligence at www.libraryhouse.net

VoiceVault, the UK-based provider of voice-based biometric identity verification solutions and services, has informed Library House that it is currently seeking a third round of funding. The company told Library House that the funding would be used to grow the business and employ additional staff at VoiceVault's UK headquarters. The company also advised that it intends to use a portion of the capital to implement its strategic plans. The company stated that it would look to exit via a trade sale to a larger software company, but did not disclose a time frame for this.

Vykson, the UK-based developer of small scale power generation devices, has informed Library House that the company is currently fundraising. James Oakley, the managing director of Vykson, revealed to Library House that the company is seeking £1.2m (€1.5m) and intends to close the round by September 2008. Mr Oakley also stated that the company is on target to reach profitability in 2010/2011, and expects to exit via trade sale in approximately three years.

More companies' intelligence at www.libraryhouse.net