European countries have faced the worst of the sovereign debt and unemployment crisis. There is still a long way to go to regain pre-crisis levels of growth and capital investment, but there has been slight GDP growth and a stabilisation or reduction in unemployment in most countries. The data provided by Pitchbook show some positive trends for 2014.
Highest number of operations since 2008
The investment of private equity has rebounded in Europe, reaching the highest level of deals since 2008. More than $110 billion has been invested in European companies, although some experts believe that it should still attract more investors. According to the EVCA, "Europe is short of the long-term capital so necessary to build large companies. It won't be solved overnight, but venture capital is for the long term and when the situation improves they will be well positioned to reap the rewards.
UK and France move in opposite directions
Seeking stability, many investors flocked to the UK to close deals during 2012 and 2013. The UK & Ireland region attracted almost 40% of private investment, up from 32& in 2012 and 29% in 2011. While the other regions remained stable, the France and Benelux region saw its share decrease after reaching 33% in 2011, falling short of 23% in 2013.
B2B versus B2C
An interesting trend, reflecting the current economic situation, is a shift in the investment from private equity which is moving away from B2C companies. Due to high unemployment rates disposable income for consumption of products and services is scarce. B2C comprises 24% of total investments in 2013 when it was 28% in 2012. In contrast, B2B companies have seen their share grow from 37% in 2010 to the current 40%.
"In addition, there must be another trend unrelated to the European crisis because in the US, B2B investment is also growing compared to B2C. In fact, in 2012, 70% of the 50 largest deals went to B2B startups for a total of $2.2Bn. In contrast, B2C startups raised $1.28Bn of which $450M came from two deals. Uber and Pinterest."Explains Diego Gutierrez, corporate finance expert at Abra Invest.
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