European venture capital firms raised the highest amount in three years in 2005, with fundraising reaching EUR 3.7 billion, according to VentureOne, a unit of Dow Jones. The total amount was 160% more than the EUR1.42 billion raised in 2004, although two fewer funds closed in 2005. The fourth quarter of 2005 was the largest fundraising quarter of the year, with venture capital firms raising EUR1.06 billion – an 82% increase over the EUR 582 million raised in the fourth quarter of 2004.
“The significant level of fundraising could account for the drop-off in European investment activity in the fourth quarter, in which deal flow was down 17% from the same quarter a year earlier,” said Steve Harmston, director of global research at VentureOne. “Investors may have concentrated their efforts on closing the funds that will sustain investments into the future, rather than closing rounds.”
The median size of a fund closed in Europe in 2005 was EUR39.4 million, compared to EUR17.2 million in 2004.
Among the largest funds that closed in Europe in 2005 were the EUR385 million Sofinnova Capital V fund and the EUR300 million Index Ventures III fund.