Europe's tech startups take funding knock as VC investment tumbles across the board

Summary:A general cooling of VC funding looks to be hitting the continent, with IT in particular seeing a drop.

Europe's tech sector appears to be suffering a dip in VC interest.

According to figures from Dow Jones VentureSource, released on Monday, the amount of VC money coming into Europe's IT sector during the third quarter of this year was down 71 percent quarter on quarter.

At €131m, IT accounted for 12 percent of all VC money raised in Europe for the quarter, compared to 28 percent for the same quarter a year ago. With 61 deals made, deal flow was down 11 percent quarter on quarter, Dow Jones VentureSource said.

The IT industry reflected the general VC climate on the continent: five of the seven sectors the company monitors showed a drop in VC funding over the quarter, with the only exceptions coming from the utilities and business/financial services industries.

For all sectors investment into European companies reached €1.13bn, down 32 percent quarter on quarter — one of the lowest quarterly totals seen over the past two years. The average deal size has also hit its lowest point since the first quarter of 2011, at €1.17m.

It was a less gloomy picture for mergers and acquisitions of VC-backed companies, with the number of M&As rising 39 percent year on year. All of the top three biggest mergers and acquisitions in Europe by value came from the tech sector: Adobe's purchase of marketing software maker Neolane for $600m; NTT's takeover of webconferencing company Arkadin for €350m and Samsung's buy of OLED tech company Novaled for €260m.

Across the continent, the UK remained the centre of VC activity, accounting for almost half of all venture funding during the quarter. Germany came second with 17 percent, narrowly beating France's 16 percent.

Further reading

Topics: Start-Ups, EU

About

Jo Best has been covering IT for the best part of a decade for publications including silicon.com, Guardian Government Computing and ZDNet in both London and Sydney.

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