“UK dominance of EU VC slipping,” France picking up the slack, early & late stage

Jul 23, 2013
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Ben Rooney of the WSJ published a great article yesterday on a study done by DFJ Espirit concerning Venture Capital in Europe. The entire article is worth a read – however, most is based off of the infographic below – but here is the tl;dr key figures version of the story.

Europe has roughly 50% the number of <$5M investments as the US

This is fairly normal, but what’s interesting is that Europe has begun weighing itself against the US, instead of saying “oh, well they are a whole different ball game.”

“The real issue is that we should be growing the number of companies getting funding up to the 1,000 as they do in the U.S., but instead what we are seeing is the 200 is static and that the interest has shifted from the U.K. to other parts of Europe,” he said. One of the reasons France is drawing more investment, said Mr. Cook, was a difference in fiscal policy between the U.K. and France. – WSJ

The overall sentiment: the UK is no longer the only place to get investment, early & late stage; however, that does not mean that the number of deals is rising, it just means that the same investment money is going to different places (like France).

$1.81B invested in Europe in the first half of 2013: $656M in the UK, $399M in France, and $343M in the “DACH” (Germany, Austria, German-speaking Switzerland)

The break-down here is interesting. Clearly the UK is still the most active in terms of investment capital; however, the deal-flow ratio is changing. For example, in terms of raw deals, France saw more large(>$5M) and small (<$5M) investments, as seen below; however, the deal values still fall below that of the UKs.

Of course, this data is always variable based on what investments you count and which you don’t. German investment is heavily focused on eCommerce, but France has its share of eCommerce giants as well.

The key takeaway for me was that  France is getting early stage investment, and France is getting late stage investment. There’s no way to prove why – Ben Rooney and DFJ Espirit’s Simon Cook suggest that it has to do with France’s fiscal incentives, though people rarely site fiscal policy in France as a boon – I would argue that it comes down to talent. France has more of it in the engineering and developer world. Hardware and Software, we’ve got companies raising early & late stage rounds,