brabo ventures trend watch
 rend Watch, 2005
A view on VC activity in the first half of 2005
After a slow start to the year, with more conservative 2005-H1 activity, we like to think that we will see a strong rebound in the VC market for
the rest of 2005.
According Tornado Insider data, the second quarter of this year does not show us the expected reboot of the industry. Well to the contrary, a usually strong VC quarter shows a 36% decrease compared to the previous quarter, bringing back the activity of high tech funding to 2003 levels. 178 deals were recorded during Q2 2005, totaling EUR 667 million of
financing. The number of deals went down 13% compared to Q1 2005, and the average deal size decreased 27% to EUR 3.6 million; the lowest average since Q2 2003.
Looking at the industry sectors this money is invested into, the Life Sciences sector still dominates all others. With 41% or EUR 269 million of total tech funding raised in 2005-H1, biotech, pharma, medical device and related service companies are still number one on most VC company’s radar. On a shared second position, software and communications companies each attracted 17% or around EUR 120 million each. Computers and electronics, with Internet technology companies together were able to raise another 15% of the cake.
As mentioned, VC spending plunged in most European countries, except for Austria, Belgium and Portugal. The UK remains the leading VC market, followed by Germany and Denmark.
Most investors are still most interested in second and third round financing, whereas seed and first rounds still lag behind substantially.
We believe there are many opportunities in that space for funds that welcome such early engagements.
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