Deals

International venture capital plummets 63 percent in Q2

Overseas markets saw a sharp drop in venture capital investing in the second quarter, falling 63 percent since last year to $1.46 billion across 250 deals — the lowest it’s been for six years, according to Dow Jones VentureSource. To put this in context, $5.27 billion was invested in 595 deals in the U.S. during the same time period.

The data VentureSource collected comes from Canada, Israel, China, India and Europe. The second quarter’s investment total is lower than the $1.99 billion distributed in the first quarter — a typically slow time for the market. And it’s much lower than last year’s second quarter figures: $3.95 billion invested across 452 deals.

Europe was hit particularly hard this time — investing only $831 million in 156 deals, down 47 percent from the $1.58 billion across 272 deals during Q2 last year. It has officially hit its lowest point since VentureSource began tracking this data in 2000. The plunge can largely be attributed to the erosion of Europe’s information technology space, which only received $287 million across 72 deals during the quarter — 67 percent less than last year. Drilling down into the sector, software performed the worst, drawing $83 million for 24 deals — the lowest numbers to date. Investment in health care on the continent also took a small dive from $270 million in 43 deals to $259 million in 29 deals. And, as elsewhere, cleantech took a major beating, with investment falling 84 percent to $55 million across 10 deals.

In Europe, the median size of deals dropped 13 percent to $3 million. In Israel, it dropped 32 percent to less than $4.1 million, but it stayed fairly flat for China, India and Canada. The U.S. also saw this trend, with deal size dipping 18 percent from $8 million to $5 million.

The world’s eyes have been fixed on China as the ascendant force in the global economy — but its VC data doesn’t hold up to these expectations. Venture capital investing in the country fell 80 percent in Q2 from $1.39 billion across 76 deals to a mere $282 million across 33 deals.

VentureSource said it observed more investment in later-stage companies — indicating that the global recession has forced firms to keep their portfolio holdings on life support instead of backing new enterprises. With the exit market remaining tight as a drum around the world, this is predicted to be the case for months to come.

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