Venture capital retreats from tech initiatives - FT.com

Summary:
Outlook looks bleak for technologists in Europe who are trying to raise money to get new ventures off the ground. Venture capital investment in Europe’s fledgling technology companies last quarter fell to its lowest since the dotcom crash. In the UK, investments fell by only 5% year-on-year, but in Germany they fell much further. Biotech will be particularly vulnerable if the downturn in venture capital funding continues, although cleantech should be more robust. Evidence of nervousness among specialist investors about the world economy in the wake of the credit crunch. The already high risks of the asset class have been increased in the eyes of investors by global financial instability. (Published: 23/07/08)

Notes:

• outlook looks bleak for technologists who are trying to raise money to get new ventures off the ground
• nervousness among specialist investors about the world economy in the wake of the credit crunch
• Europe: mere €950m ($1.5bn) invested in Q2 2008
  
• €450m less in Q2 2008 than in Q1 2008
  
• €350m less in Q2 2008 than in Q2 2007
• UK: decline of just 5 per cent year-on-year to €311m
• has a culture of equity investment
• Germany: investment fell much more heavily
  
• Richard White at Library House
• “The fundamentals should be strong, because the majority of fund raisings do not have a debt component, but it appears that venture capital investors are as much prey to the current psychological uncertainties as everyone else”.
• already high risks of the asset class have been increased in the eyes of investors by global financial instability
• biotech
• will be particularly vulnerable if the downturn in venture capital funding continues
• cleantech
  
• should be more robust
• “There are strong forces at work here, as governments seek to combat climate change.”

• Venture capital investment is tiny by the standards of private equity but is a vital stimulus to the commercialisation of ground-breaking technological research