Venture capital investment outside the US was up five per cent to $13.4 billion in 2008 as more money went to energy and new regions, according to data from Dow Jones VentureSource.
Venture capitalists invested more than $13.4 billion in 1,416 deals for emerging companies in Europe, Israel, Mainland China and India last year.
This is nearly a five per cent increase over the $12.8 billion that venture capitalists invested in 1,711 deals outside the US in 2007 and comes despite a 15% drop in annual venture investment in Europe. Still, the US remains the world’s leading destination for venture capital, accounting for 2,550 deals and $28.8 billion in investment in 2008.
“The venture capital industry continues to rapidly globalise as investors are eager to find and tap new areas of innovation, especially in emerging economies like China and India,” says Jessica Canning, director of Global Research for Dow Jones VentureSource. “What’s most notable is that the growth in international investment is not being fuelled solely by IT, which is traditionally the sweet spot for venture capitalists, but also by energy-related investments. Investments in energy totalled nearly $1.4 billion in 2008 and now account for more than 10% of international venture investment. Much of this can be attributed to the global spike in energy prices we saw in 2008 and the venture community’s championing of renewable and clean energy technologies.”
According to VentureSource’s results, Europe saw a late-year pullback in venture investment which led to an overall annual decline of 15 per cent as investment fell from $7.6 billion in 1,107 deals in 2007 to $6.5 billion in 881 deals in 2008. This marks Europe’s lowest deal count since VentureSource began tracking the region in 1999. The region ended the year on a low note as investment fell 38% from $2.1 billion in the fourth quarter of 2007 to $1.3 billion in 2008, its lowest quarterly total in more than four years. Europe did, however, see a surge in energy and utilities investment. The data shows that venture capitalists put a record $816 million to work in 59 of these deals in 2008, up 89% from the $431 million invested in 52 such deals in 2007.
China saw venture capitalists invest a record $4.2 billion in 245 deals in 2008, up from $2.8 billion in 290 deals in 2007. The region saw investment top $1 billion every quarter in 2008 except for the fourth quarter, which saw investment tumble to $716 million in 54 deals, 9% below the $787 million put into 84 deals in the final quarter of 2007. IT investments led the way as investors put $1.6 billion into 86 such deals in 2008, up 60% over the $1bn invested in 117 IT deals in 2007. China’s consumer services industry saw record investment in 2008 with $1 billion put into 50 deals, up 57% from $652m invested in 51 deals in 2007. According to VentureSource, the median deal size in China is now the highest in the world – reaching a high of $10 million in the region in 2008.
Venture capitalists put a record $1.9 billion into 210 deals for companies in Israel in 2008, up 19% over the $1.6 billion put into 227 deals in the region in 2007. Of that, $1.3 billion, or 68% of all capital investment, went into 132 IT deals, nearly 30% more than the $1bn invested in 153 such deals in 2007. Healthcare companies in Israel attracted $331 million in 2008, an increase of 4% over 2007. Energy and utilities companies garnered a record $167 million, up 149% over the $67m invested in the industry in 2007. The data shows that the median size of a venture deal in Israel also set a record in 2008 and now stands at $5 million.
Venture capital investment in India also set a record in 2008, though its growth was minimal compared to prior years, according to the stats. Investment in India-based companies reached $864 million in 2008 with 80 deals completed, up some 3% from $842 million invested in 85 deals in 2007. Unlike China and Israel, which have more firmly established business infrastructures, India saw the majority of venture investment go to its business and financial services companies, which garnered a record $368 million in 26 deals in 2008. That is more than double the $144m the industry saw invested in 20 deals in 2007. India’s IT industry saw investment fall 45% from $319 million invested in 32 deals in 2007 to $176 million in 22 deals in 2008. Energy and utilities investment in India climbed some 75% in 2008 to $70 million. India was the only region to see its deal size hold firm year-over-year, remaining unchanged at $8 million in 2008.
D.C.