European venture funding down by half in 2001

Venture capital (VC) investment in Europe fell by more than half in 2001, compared to 2000. Nevertheless, a total of €9.6 billion was raised in 1,800 deals, according to research carried out by VC specialists VentureOne and consultants Ernst &Young.

“Businesses [in Europe] that rely on intellectual property and are protected by high barriers to entry – such as biopharmaceuticals and software – were better equipped to weather 2001,” said Gil Forer of Ernst &Young’s Venture Capital Advisory Group.

The research was based on a survey of more than 1,000 European VC firms and focused on early-stage investment.

According to the research, companies in just four countries scooped up more than three-quarters of all VC investment in Europe. Those countries were the UK, Germany, France and Sweden. In addition, investments were also concentrated in four main industries: biopharmaceuticals, software, communications and consumer and business services.

Despite the severity of the downturn in the IT industry, the biggest sector was software, which accounted for 29% of deals and 24% of the investment. A total of €2.3 billion in VC money was invested in software in 2001.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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