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Raising capital for Europe's
growth economy - towards entrepreneurship and a European venture
capital market
So there is still much potential for providing funds for investment
in our ambitious, innovative, growth companies - and European venture
capital companies are making a significant contribution to Small
& Medium-sized Enterprises in the EU and beyond:
Figures from the European Venture Capital
Association for the first six months of 2000:
- a total of €13.5 billion (£8.6
billion) was invested in 4,630 companies in the EU, Czech Republic,
Hungary, Iceland, Norway, Poland, Slovakia and Switzerland by
613 private equity houses
- Specifically in the technology sector,
2,277 companies received a total of nearly €4.4 billion (£2.8
billion) in Europe
- Stage distribution of that investment:
| |
Amount
€ |
%
|
Number
of
companies |
% |
| Seed |
385,656 |
2.9 |
431 |
9.3 |
| Start-up |
2,124,013
|
15.8 |
1,623 |
35.0 |
| Expansion |
4,762,366 |
35.4 |
1,883 |
40.7 |
| Replacement
capital |
1,116,479 |
8.3 |
263 |
5.7 |
| Buyout |
5,081,658 |
37.7 |
430 |
9.3 |
| Total
|
13,470,173 |
100
|
4,630
|
100 |
- EU Member State highlights, in order
of amount invested:
| Country |
Amount
invested
|
Number
of companies |
| UK: |
€5.4
billion |
808 |
| Germany: |
€1.6
billion |
878 |
| France: |
€1.5
billion |
879 |
| Italy: |
€1.3
billion |
288 |
| Netherlands:
|
€997
million |
415
|
| Spain: |
€498
million |
167
|
| Sweden: |
€606
million |
238 |
| Belgium: |
€307
million |
249
|
| Finland: |
€234
million |
200 |
| Denmark: |
€189
million |
70
|
| Austria:
|
€96
million |
68 |
| Ireland: |
€41
million |
53 |
| Greece: |
€36
million |
28
|
| Portugal: |
€30
million |
42 |
| Luxembourg:
|
N/A
|
N/A |
Figures from the European Venture
Capital Association for 1995-1999
European
VC funds raised and invested
1995-99:
|
|
Sources
of funds raised in 1999: |
| 1995 |
€4.4
billion raised, €5.5 billion invested |
|
Banks: |
€7.4
billion |
| 1996 |
€7.9
billion raised, €6.7 billion invested |
|
Pension funds: |
€4.7
billion |
| 1997 |
€20
billion raised , €9.6 billion invested |
|
Insurance companies:
|
€3.4
billion |
| 1998 |
€20.3
billion raised, €14.4 billion invested |
|
Corporate investors:
|
€2.4
billion |
| 1999 |
€25.4
billion raised, €25.1 billion invested |
|
Funds of funds: |
€1
billion |
Also, in the period 1991-95, venture
capital-backed companies in Europe saw:
- an average 15% rise p/a in employment
(compared to 2% for the top 500 European companies).
- an average 35% rise annually in
sales (twice as fast as the European top 500 companies).
Next steps
The EU risk capital market has performed
much better in recent years but remains small and fragmented in
comparison to that of the United States. Although there is no evidence
of a generalized market failure, early stage and technology investment
remains particularly low. The challenge for policy-makers at all
levels of government - local, regional, national and EU - lies in
how best to create and support the conditions for this more efficient
and effective venture capital market.
The objective for the public
and private sector alike must be to boost the "investor readiness"
of enterprises. In this context, the quality of management teams,
the supply of funds, and legal, regulatory and fiscal structures,
must all be addressed. Further development of the EU risk capital
market also requires accelerated market integration, the easing
of country-specific constraints on efficient market functioning
and, more generally, the promotion of a more entrepreneurial culture.
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