CVCs remain optimistic on investment activity

Corporate Venture Capitalists (CVCs) remain optimistic about investment activity in Europe according to a survey published by Ernst & Young, with respondents anticipating that Europe will be the second most important market globally over the next 24 months, behind only the US.

The report - Global Corporate Venture Capital Survey 2008, which is produced in association with the European Venture Capital Association (EVCA) and the US National Venture Capital Association (NVCA) - also revealed that the majority of firms expect deal activity in 2008 to match that seen in 2007. The results bode well for traditional venture capital firms, which are considered as the most important source of deals by 65% of respondents. The majority of surveyed firms suggested that their preferred method of investing is alongside an independent VC, which would lead the transaction and carry out much of the leg-work.

Though investment by corporate venturing units has fallen significantly since 2000 as the industry has increasingly consolidated following the burst of the technology bubble, European CVCs have fared well and continue to punch above their weight globally, with five of the top 10 most active corporate investors worldwide being based on the continent. Four of these - Novartis Venture Fund, SAP Ventures, Siemens Venture Capital and Holtzbrinck Ventures - are based in the German-speaking markets (with Novartis based in Switzerland and the other three in Germany), emphasising the buoyancy of the venture space in the region. The remaining group, France-based Innovacom, was the most active CVC over the 15 months to end Q1 2008, with 13 rounds of investment completed in total.

In terms of exit routes, the volatility of the public markets has resulted in only 12% of divestments over the last two years being achieved through IPOs. More than half of all exits over this period were achieved through sales to a third party, while a further 15% were accounted for by acquisitions by the parent company.

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