Innovation funding in Europe has seen a rebound in value in Q1 2013 compared to Q4 2012, with total investment of $ 1.4 billion(+24%), according to a Clipperton Finance report on European innovative companies during Q4 2012 and Q1 2013.
"Despite this, compared to the much more active and developed North American investment market, it represents an investment volume four times smaller". According to Diego Gutierrez (CEO of Abra Invest), a company specialising in alternative financing for SMEs.
5 operations above 100MM$ (Q4 2012-Q1 2013)
This upturn was led by a couple of so-called 'mega-funding' transactions:
- The $130 million round of funding received by the Finnish game company Supercell
- And the $ 119 million round led by Russian tycoon Roman Abramovich for UK-based new next generation mobile operator Truphone.
These deals followed several large funding rounds in Q4 2012, including major music platforms Deezer ($ $132 million) and Spotify ($100 million). "I would also highlight the softonic by the Spanish internet fund Intercom for 109M$", says Diego Gutierrez.
Value per transaction: either large or small. And the necessary bridge?
Q1 2013 saw a very significant increase in seed funding with 52 deals of a size below $ 1 million (60% vs Q4 2012). The European total
Seed funding was US $$ 42 million during the last quarter (compared to USD 26 million during the previous quarter).
Small-sized rounds ($ 1-5m) maintained activity over the last six months with 191 offerings during the period. By value, these rounds were almost half a billion USD with $ 238m during Q4 2012 and $ 239m during the last quarter.
Medium-sized rounds ($ 5-30m) accounted for a limited share of the total deal volume. Only 21 deals (+15%) were closed in the $ 5-10m range during Q1 2013 (vs. 18 in the previous quarter) for an amount of $ 151m (+10%) (which compares to US $ 139m in Q4 2012).
On the other hand, accelerator rounds ($ 10-30m) still represent only one third of the total investment value, the same amount as larger deals (> 30m USD). According to Diego Gutierrez (ABRA INVEST) "this shortage of funds in acceleration phases is a sign of the high demand from VCs for second rounds asking for very high levels of turnover growth".