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News : Innovation Last Updated: Mar 21, 2014 - 8:26 AM


Venture Capital 2013: US financing at $33bn; Europe $7.1bn; China $3.5bn; Israel $2.3bn
By Michael Hennigan, Finfacts founder and editor
Mar 20, 2014 - 6:57 AM

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Venture Capital 2013: Financing provided by venture capital for young companies -- mainly in the high tech sector - - last year amounted to $33bn in the US; $7.1bn in Europe; $3.5bn in China and $2.3bn in Israel.

In Ireland VC financing amounted to $364m in 2014 and in recent years the Irish Government has invested about $300m in VC funds.

The Economist wrote last year: "IN THE world of startups the rule of thumb is that young American firms raise twice as much money in each round of financing as European ones—and twice as fast. "

In the US venture capital has accounted for the early financing of only about 1% of America's currently active employer companies.

A total of 2,277 private tech companies from around the globe were acquired in 2012, according to research firm CB Insights. However, 76% of these firms had not raised venture capital or private equity.

CB Insights said the value of most of the acquisitions was never disclosed by the buyer. However, 331 of the buyouts were made public, and totalled $46.8bn during the year.

Over 50% of the companies were acquired for less than $50m, and 80% of the startups sold in 2012 went for less than $200m. Just eight were valued at $1bn or over.

The Wall Street Journal's CFO Journal blog said last month that only 34% of US startups that received seed funding 13 months ago are receiving follow-on financing, according to data through October from CB Insights. That’s down from about 40% in the previous four years. And while the number of seed-financing deals increased by 46% between 2009 and 2013, follow-on financing hasn’t kept up, increasing by just 14% over the same period, according to Dow Jones VentureSource.

Europe: Dow Jones VentureSource says that a total of €5.6bn was raised during 2013 as a whole in Europe, an improvement of 15% on 2012 and 7% on 2011. In terms of deal flow, 1,395 were completed in 2013, equating to an increase of 6% on 2011 and 2012 figures.

In 2013 as a whole, the UK took a 29% share of investment (€1.6bn), Germany an 18% share (€992m), and France received a 14% share (€785m).

The Consumer Services sector received the largest allocation of investment during 4Q’13 (37%), accumulating €553m through 106 deals, an increase of 136% from 3Q’13 in capital raised despite deal flow remaining level.

Healthcare placed second in terms of equity financing, taking a 27% share of all 4Q’13 investment. The sector raised €392m across 55 deals, a rise of 23% and 31% from respective 3Q’13 figures.

Business and Financial Services occupies third, with companies gathering a 15% share of the total amount invested during the quarter. The sector received €223m across 92 deals, an uptick of 3% in deal flow but a drop of 29% in capital raised from 3Q’13.

The Consumer Services sector placed first for euros raised during all of 2013, with €1.5bn equating to a 28% share of investment for the year. Healthcare companies raised €1.4bn giving the sector a 25% share, while the Information Technology sector placed third with a 19% share of investment (€1.1bn).

Report [pdf]

China:  Investment into Chinese venture-backed companies markedly improved in 4Q’13, as companies raised $1.5bn from 106 deals. The gains equate to a 76% increase in capital and a 16% increase in number of deals from the previous quarter.

314 deals were completed for China-based VC-backed companies during 2013 as a whole, up 20% on the figure for 2012 but dropping 22% on the number completed during 2011. In terms of capital raised, $3.5bn were accumulated during 2013, representing an overall decline of 29% from 2012 and 45% from 2011.

Report

Israel: The IVC Research Center reports that 2013 was a record-breaking one with 662 Israeli high-tech companies closing financing rounds. Companies raised $2.3bn – the highest amount in the past 10 years and second only to the $3.1bn raised by local startups in 2000.

Three hundred and ninety-five VC-backed deals attracted $1.7bn or 74% of the total amount raised in 2013, just above the 72% of 2012, but well lower than the 83 and 87% reached in 2011 and 2010, respectively.

Eighty-four foreign VC funds made at least one first investment in Israel in 2013, an 11% increase compared to 2012’s 76, and a substantial 223% increase from 2009 levels. And while foreign investors increased their activity in Israel, Israeli VC funds’ first investments dropped to near 2009′s level, with only 38 Israeli VC funds making at least one first investment. Of 255 first investment deals made in 2013 only 111, or 44%, were made by Israeli VC funds.

Report [pdf]

US: Dow Jones VentureSource says in 2013, 3,480 deals - - less that 1% of the number of firms with employees that were founded in 2011 - - have been completed raising $33bn, respectively a 5% decrease and 1% increase on figures posted in 2012.

Business and Financial Services saw the largest investment allocation, with 207 deals garnering $2.3bn and accounting for 26% of total equity investment.

The Healthcare sector raised the second highest proportion of investment for 4Q’13. Healthcare companies drew $2.3bn across 188 deals, up 20% and 11% from respective 3Q’13 figures.

Information Technology (IT) placed third with $1.7bn in 248 deals, dropping significantly from the $2.4bn accumulated in the previous quarter. The sector’s investment figure represents a 19% share of total equity investment into U.S. VC-backed companies for the quarter.

$1.6bn were raised by Consumer Services in 177 deals, an increase of 9% in deal flow, while capital invested went up by 3%. 

Report [pdf]

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