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May 2003 Private Equity Intelligence indicates European funds have given consistently better returns than their more numerous, larger counterparts in the US. According to them, this led to a swelling of funds invested in Europe in the second part of the 1990s. December 2002 Atlas Venture, a renowned European venture capital firm, slashes the size of its latest fund by 38 % to 600 M$, closes offices and makes senior officers redundant. What is left will be focused on Boston and Europe. November 2002 Agefi indicates that Royal Bank of Scotland is regrouping its private equity activities in London into a single subsidiary called Equity Finance. UBS Capital is said to think about selling some or all of its investments in private equity funds. Large US LBO funds find a new interest in Europe with an understanding that they need to rely on local people. October 2002 The US trend to commitment reduction is at work in Europe. Benchmark Capital Europe, Carlyle Internet Fund and Viventures did it. Galileo Partners raised Galileo II B (12.6 M€) at the beginning of 2002 to remediate the lack of remaining cash in its predecessor. The fund is to be used only to refinance deserving investments made by Galileo II (1998, 76 M€). Now, it is reducing the size of Galileo III from 250 to 158 M€ and one of the partners is said to be on the go. September 2002 A debate between the Houston Chronicle and University of Texas Investment Management Co (UTIMCO) recently led to a decision by the Board of UTIMCO to disclose fund-by-fund performance figures. This in return created such a shock to most of these funds that a backlash ensued. Only those confident with their fund performance seem unaffected. It does not appear to constitute a majority. I did not manage to find the information on the site of UTIMCO. It is available on the site of InsiderVC though, in the "parasites area". May 2002 According to EVCA, €38.2 billion were raised and €24.3 billion invested in 2001, as opposed to respectively €48 billion and €35 billion in 2000. As regards stage distribution, only one third of vthe €12.2 billion venture capital investments went to new companies. Concerning individual countries, Germany is now second behind UK (€7 billion) as regards amounts invested with €4.4 billion and France third with €3.3 billion. It leads Europe in terms of number of deals with 1,969 companies funded. A survey by Ernst & Young and VentureOne shows venture capital investements in Europe declined by a third in the first quarter of 2002 to € 1.18 billion from € 1.75 billion in Q4 2001. The picture is contrasted across Europe, with Germany plunging 76% and Sweden 64%, a 2% increase in UK and a 24% growth in France. Benchmark Capital is slashing the size of its European fund by $250 million to $500 million and delighted about it. Some of the questions raised when it moved across the Atlantic now seem all the more appropriate. The recent performance of the private equity arm of large investment banks is being published. In the US, JP Morgan Partners is announcing first quarter 2002 losses of 255 M$, following 1.2 B$ losses in 2001. UBS Capital recently published 462 MCHF losses for the first quarter 2002, following 287 MCHF losses in the preceding quarter. Still worse, professionals do not expect the outlook to be any more rosy in upcoming quarters. In UK, 3I announced losses of £960m for the year to March 31, mainly stemming from investments in technology. April 2002 Investment in European venture-backed companies dropped by half from 2000 to 2001, when €9.6 billion were raised in 1,801 deals, according to the first joint global venture capital survey of early-stage, innovative companies by Ernst & Young and VentureOne. The number of financing transactions in Europe fell by over one-third, and the value of those companies receiving financing declined 20%. While steep, these declines are less than those seen in the US, where investment fell 65%, transaction volume fell 52%, and pre-money valuations declined 40% during the same time period. January 2002 Whereas two years ago, venture capital appeared a sure way of making money quickly and easily, the experience has now become more painful and a number of players are getting closer to the door - or out. In the US, Barksdale Group, founded in 1999, has annouced it will dissolve following difficulties in raising money. In UK, Lucent Technologies has sold an 80% stake in its venture capital division Lucent New Ventures Group to secondary fund Coller Capital. The fund had invested in a number of spin-offs from Lucent's R&D group, Bell Labs. December 2001 Goldman Sachs and Russell Publish their Fifth Global Report On Institutional Alternative Investing by tax-exempt institutions. Major findings concerning Europe include:
November 2001 International venture firms cut their European operations. Some of those that followed the best approach to develop a European presence by setting up local teams and building a presence now retreat to pare expenses. Softbank European Ventures, Global Retail Partners, Antfactory or 3I have been closing offices on the Continent. For some of these, the question will be whether it is possible to operate throughout Europe from London on a remote-control basis? Bandwith Capital and Silicon Valley Bank, two US firms specialized in financing start-ups with instruments somewhere in between venture capital and loans, have become active in Europe where they find deals that remedy the prudent attitude of VC investors. October 2001 The Wall Street Journal indicates that in the third quarter, private equity investment in Europe dropped off to 12 billion € from 24 B€ for the second quarter. This trend shows across all sectors of the industry except for follow-on rounds. In the US, Venture Wire indicates that venture capital deals in the third quarter totaled 6.7 B$ in 540 companies against 23.9 M$ in 1 634 companies a year before. In recent years, one of the largest and oldest private equity house, mainly active in buy-outs, 3I, has expanded to follow the trends, developed its teams to invest in start ups in Europe, and opened up offices in the US. This expansion could have come to an end. According to Les Echos dated October 30, the firm could be preparing a large redundancy program covering up to 50% of its personnel in some offices. The firm employs 600 people in 38 offices in Europe, 2 in the US and 3 in Asia Pacific. If many investors are suffering from the excesses of the recent years, secondary funds seem ready to flourish. Their activity is to buy out funds or stakes in funds from investors that want out. In the case of internet funds, indications are they might pay 10 cents on the dollar. Some of the institutions that were most keen to invest in primary funds a few years ago now study secondary funds. Good job ! Statistics show how money raised in Europe shot up in recent years to reach a record in 2000, significantly above amounts invested. However some signs appear to indicate that these commitments could shrivel. Softbank Europe Ventures has had to reduce the 1 billion $ initially committed to its fund under pressure from its sponsor Softbank according to Les Echos (October 8). The fund has closed its Paris and Munich offices to operate from London. The same article indicates the same could be true regarding incubator Antfactory. September 2001 Insight Capital Partners is restructured to change from one global management to regional funds with a regional management. Favonius Insight Ventures will invest in European and Middle Eastern technology companies. August 2001 Venture Economics stats show that in the US Net deals continue to get done, even if obtaining funding is an ordeal. Nine months figures for 2001 will be well below comparable for 2000 but could match 1999 figures. July 2001 Calpers, the main US pension fund, creates havoc in the PE industry by deciding to make public the performance of the funds in which it had invested in previous years. This closely garded information makes for a very secret profession. Due to the reaction, the information is no longer available on the website. Facing a more difficult US market, large US LBO firms allocate a larger potion of their latest funds to investment in Europe. According to Thomson Financial Venture Economics, for the first time since 1974, worldwide venture capital logs losses on 2 consecutive quarters. The average loss of 8.9% in the first quarter of 2001 follows a decline of 6.3% in the last quarter of 2000. It also expects 2001 to be the first year as a whole that will show negative performance over 12 months since it started monitoring the sector in 1970. JP Morgan Partners reviews the value of its PE portfolio down by 1 billion dollars on a total estimated at 10 billion dollars. This is traced mainly to the downward revision of the value of telecom and technology investments and come despite a transfer of 1 billion $ transfer to Lexington Partners at the end of 2000. June 2001 Accel Partners announced it is closing its first Accel Europe Fund at $500 million. April 2001 Announcements indicate that while ePartners - a UK based joint venture between Newscorp and Softbank effectively closes down, other experienced VC firms raise record amounts of money. December 2000 Warburg Pincus is expanding its operations by opening up an office in Munich. This is in addition to offices already present in UK and Scandinavia. According to the Managing Director of the Munich office, they felt they could not address the Continent from Great-Britain. November 2000 Swiss
Internet and technology investment firm ETF Group
goes global and opens its first offices in the U.S.,
Paris and London.
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