Early-stage investments: German deal volume booms

Anneken Tappe
31 July 2012

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While German early-stage activity has risen in volume in the first half of 2012, the UK holds its own with strong overall deal value.

Germany and the UK are Europe's largest venture markets in terms of deals completed and capital deployed, followed by France and Spain. Yet, considering the year to date, they show an averse trend in terms of overall value and volume of deals completed.

German deal volume has been on the rise and outpacing the UK – which traditionally takes top spot – with 26 deals completed since January, according to unquote" data. The UK only saw 15 deals between January and July 2012, but deal values totalled €160m, which is more than €65m above the German total.

Both value and volume of British early-stage deals have collapsed between 2011 and 2012. Yet, the largest venture deal of the year happened in the UK, with a consortium led by RIT Capital and Fajr Capital injecting £65m into alternative electricity provider Tamar Energy. Three months later, Ludgate upped the investments with an extra £7m.

Venture capitalists like to say their industry is more detached from macroeconomic developments than private equity. But in light of the current eurozone crisis, investors tend to be more more cautious, due diligence more rigorous and capital stickier – both dealflow trends, be it high-value/low-volume and low-value/high-volume, therefore illustrate two different ways of navigating the same uncertain economic environment.