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Surv ey highlights attractiveness of German venture capital market

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Investing in Europe is a priority for just 4% of mid-market venture capitalists, although almost 50% would consider it, according to a survey conducted by Grant Thornton Corporate Finance. A lack of interest in overseas investment was cited (39%) as the principal barrier preventing venture capitalists from raising funds in Europe, followed by the restrictions in their fund requirements (32%). The commonly-cited obstacles of red tape and language or cultural barriers accounted for just 13% and 4% of hurdles respectively. Likewise, lack of perceived returns (2% of sample) and internal resources (9%) were not major concerns for the majority of venture capitalists.Germany would be the most likely country to attract the attention of private equity investors (24%) if they were to invest in Europe. France and the Netherlands were also singled out as potential targets by 15% of venture capitalists, whilst a further 7% mentioned Spain. On a broader level, 13% of venture capitalists said they would consider investing anywhere in Western Europe.Looking at the results in greater detail, 13% of venture capitalists said that if they were considering investing in Europe, healthcare would be their main target. This was followed by 12% of respondents citing business services and industrial products, 9% financial services and 6% computer activities. Given that business services (20%), healthcare (15%), and financial services (11%) were identified as the main sectors venture capitalists targeted in the UK, it is interesting to see that potential future investments in Europe would be sought in a more diverse set of sectors.'Germany is a popular choice for venture capitalists who would consider investment in Europe, due to its strongly developed manufacturing and healthcare sectors. Within manufacturing, the automotive and chemical industries are particularly prominent, but the telecommunications sector is also increasingly important to the German economy and a potential target for UK-based venture capitalists', said Mat Bhagrath, partner at Grant Thornton Corporate Finance.The Grant Thornton Corporate Finance survey was conducted during March 2005 amongst 100 mid-market venture capitalists which are typically involved in deal values of between Â£5-200m.