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The European VC investment trends that took place in Q1 2015

Of course, the particular UK funding round we’re referring to came in the form of a $150m Series E for peer-to-peer business lender Funding Circle, which was secured following a $65m Series D under a year ago in July 2014.

Funding Circle CEO Samir Desai said it will support the company’s long term future while serving as a next step on our journey to creating a sustainable, category-defining business.

The impressive sum instantly projected the London firm into the top five of Britain’s biggest VC deals a list led by a $236.2m injection for IT business Netscalibur that took place back in 2000.

In fact, the figures showed that the majority of the country’s top ten VC deals were made in the early noughties. The second-most recent round in the top ten went to Oyster Petroleum back in September 2013.

New findings from Dow Jones VentureSource have now been revealed in its Venture Capital Report for Q1, which has detailed VC fundraising and investment from across Europe.

Some 13 European VC funds raised a total of 874m over the first quarter a 25 per cent fall on Q4 2014. That said, the results are a solid improvement year-on-year with a 36 per cent increase.

Germany-based Holtzbrinck Ventures (HV), which counts Groupon, Depop and Zalando among investments, was the largest fund of the quarter with 285m to account for a third of the total raised. The company has a specific focus on internet entrepreneurs and announced it had closed the fund, its sixth, in January.

In addition to dominating Europe, HV also managed to outstrip its fifth fund of 175m from May 2012, putting the achievement down to a well-diversified group of institutional investors from the US, Europe and the Middle East.

As for the venture capital pumped into European businesses, 2.6bn was raised for 345 deals over the quarter. Interestingly, that’s a 41 per cent spike on the amount companies raised in Q4, even though the number of completed deals were down by five per cent.

The results were even better on a yearly basis as investment improved by 63 per cent, despite the fact the number of deals closed had fallen by 12 per cent.

On a sector basis, consumer services attracted the most investment with 1.3bn across 103 deals to account for 50 per cent, according to the report. It’s equivalent to a fourfold growth on Q4 2014 having grown from 326m.

Delivery Hero, a German rival to Just Eat, came out on top of consumer services and overall investments with a 288m round, which was provided by Rocket Internet.

Since launching in 2011, the food delivery firm has secured more than $1bn of funding, partnerships with 90,000 restaurants and has 1,500 employees.

It claimed in February that the newest investment would expand its position as a technology leader and to build its long-term vision to transform an efficient food delivery industry.

True to its word just a month later, Delivery Hero targeted the Middle East and acquired regional leader Talabat, which boasted a client base of 1,300 restaurants including KFC, TGI Fridays, Papa John’s and Subway.

The Middle East was always a missing piece to our global vision. Talabat built a fantastic business over the last years, making the most orders in the region. We will be instantly in a leading position in a region with tremendous growth potential,” said Delivery Hero CEO Niklas stberg.

Business and financial services was in second with a 17 per cent share that amounted to 443m across 82 deals. Unlike the growth in consumer services, however, the business and financial sector fell by 26 per cent for capital raised and by 12 per cent for completed deals on a quarterly basis.

Completing the top three sectors was the IT space, which secured 16 per cent of the total amount invested during the period. It secured 436m over 75 deals, and rose by 65 per cent on Q4 for investment.

Unsurprisingly, Germany was the dominant country and complemented leadership of HV and Delivery Hero. The market received some 921m across 64 deals and accounted for a third of all investments during Q1, which marked a threefold surge on the previous quarter.

Meanwhile, the UK was close behind with a 34 per cent share of all financing across the continent with 886m a 54 per cent rise on Q4.

The second quarter looks promising for the UK too. In addition to Funding Circle’s April accomplishment, brain training service Peak has raised $7m, while Currency Fair has secured 10mAnd Laundrapp has cleaned up with 4m.

In particular, tech investments across London have been strong outshining the rest of the UK in the process. In Q1 2015, investments in the capital’s tech companies had grown by 66 per cent year-on-year to reach 682m worth of VC funding.

“London has shown that it can produce exceptional companies that grow to scale quickly and become significant players on the international stage,” entrepreneur and investor Sherry Coutu, the mind behind SVC2UK, said at the time.

Global investors are increasingly tapping into this ability, providing the funding and access to export markets that companies need to ‘scale up’. This is powering the UK’s entire economy through creating growth and new jobs both in London and beyond.”

France, meanwhile, completed the top three on a regional basis with 292m raised at 11 per cent of the quarterly total.

A look at liquidity showed 49 venture-backed merger and acquisitions took place across the continent over the quarter. This was up by seven per cent on a quarterly basis but down by six per cent annually.

Giving Germany a break, the biggest M&A was with Trophos, a French healthcare firm developing treatments for neurological and cardiac diseases. It was bought for 470m by Swiss biotech company Roche.

This acquisition highlights Roches commitment to developing medicines for spinal muscular atrophy, a serious disease with no effective treatment,” said Sandra Horning, chief medical officer at Roche.

“We will build on the work done by Trophos and the French Muscular Dystrophy Association to advance the development of olesoxime and to bring it to people who live with this devastating condition as quickly as possible.

Lastly, on the transition from private to public, 12 VC-backed IPOs took place during the period two more than Q4 2014 and four more year-on-year.

They collectively raised some 417m, which was down drastically by 81 per cent from 2.25bn in Q4 2014 though that was the highest total since the second quarter of 2000 and will undoubtedly be difficult to beat.

Interestingly, it was a healthcare company that also dominated on the IPO front, as Ascendis Pharma became NASDAQ-listed in January. The Denmark-based company, a specialist in drug development technologies, raised 89m and accounted for 21 per cent of the total raised through VC-backed IPOs.

Of course, the Forbes billionaires list of 2015 revealed just how lucrative healthcare can be. 31-year-old Elizabeth Holmes made it into the ranks for the first time with a fortune of $4.5bn, which was built with her blood testing company Theranos.

Image: Shutterstock



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