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At last, venture capital for SMEs?


Integral service around a transaction
BY : Diego GutiérrezJanuary Tue, 2013

In 2012, although Venture Capital invested 22.51Tbp1T less, its investment was balanced towards SMEs in growth and with an innovative component, the start of a trend that should be consolidated in 2013.

According to ASCRI y Webcapitalriesgo, The investment The estimated number of Venture Capital entities in Spain in 2012 reached 2.525 M€ at 830 operations. This volume represents a decrease of 22.51 bTDP1T compared to 2011, although it exceeds the figure for 2009, which recorded the largest drop (€1,669m).

The main protagonist: transactions in SMEs of less than €5 billion.

It is important to note that 94% of the total were operations of less than EUR 5 million. This figure reveals the great investment effort that has been made over the past year in Spanish SMEs, especially in start-ups and entrepreneurship.

Relevant weight of growth and early-stage projects

59% of the number of deals went to expansion stage companies and 38% deals in early stage companies (Venture Capital).

Sectoral distribution: growing role of innovation

Baker Tilly International's sectors what else volume of investment received were: Other Services (26%), Products and Services (14.5%), Medical and Health (13.6%) and Communications (10.8%). The sectors with the highest number of operations The largest concentrations were IT (32%), Industrial Products and Services (13%), Biotechnology in Genetic Engineering (9%) and Other Services (8.8%). The Venture Capital sector has been betting in recent years on sectors of the future, such as engineering, biotechnology and internet. Venture Capital invests in companies with high growth potential and, above all, innovative companies.

In terms of new fundraising, only 30% have been national funds (58% public) with technology VC playing a leading role.

In 2012, there were 2.172 M€10% less than in 2011. 70% was due to the application of international funds for their investments in Spain and 30% to domestic entities (58% of this allocation was to public entities). Of note were the closures of the new Venture Capital funds of Cross Road Biotech (30 M€), Kibo Ventures (45 M€), Caixa Innvierte Industry (€23 million) and the enlargement of Active Venture Partners in Amerigo Innvierte Spain Ventures FCR (up to €54m).

Divestitures were 47% lower than in 2011, reflecting the lack of sales liquidity for this type of assets and the deteriorated situation of the investees.

Divestitures in 2012 were as follows a volume (at cost) of 956 M€ in 461 transactions. The most used divestment mechanism (in terms of volume) was the "Sale to third parties" (65%), followed by the "Recognition of losses" (16%).

Perspectives and challenges 2013: Venture Capital as a hope of improvement for SMEs and entrepreneurs.

The results of Venture Capital activity in 2012 reflect the current complex economic situation, which is not expected to improve until the end of 2013, according to some experts. Both in Spain and in the rest of the leading European Venture Capital markets, the sector's main activity variables have fallen compared to 2011. Factors such as the scarcity of bank credit, uncertainty over the evolution of sovereign debt, the lack of visibility over the medium and short term in business plans and a very deteriorated macroeconomic environment have slowed economic activity in general and that of Private Equity in particular.

However, Venture Capital is an important player in its role as a provider of equity to SMEs and entrepreneurs. Consequently, the regulator's support for this financing instrument should be understood as a fundamental part of the support for SMEs and entrepreneurship and, therefore, also as a fundamental part of the ongoing effort to improve the competitiveness of Spain and Spanish companies.

The report "Venture Capital & Private Equity in Spain 2012". was sponsored by Accuracy  y Diana Capital.

The Spanish Association of Venture Capital Institutions (ASCRI), whose main mission is to develop and promote investment in the capital of unlisted companies. The Association, chaired by Carlos Lavilla, currently has 145 members.

José Martí Pellón, professor at the Complutense University of Madrid, has been monitoring this activity in Spain since 1984 and has published numerous books and articles on the subject. 

 

Diego Gutiérrez Zarza

ABRA INVEST

www.abra-invest.com

http://abrainvest.wordpress.com/

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