Venture capitalists invested about €2.3 billion (US$3.1 billion) in European startup companies in the IT sector last year, according to U.K. research company Library House, in a study sponsored by Microsoft Corp.
Venture capitalists invested €6.4 billion in Europe last year, with 36 percent of the money targeting new ventures in the IT industry, the study found. Almost a third of the European venture-capital investments targeted U.K. businesses, it said.
“2006 was a strong year for European venture capital,” said Roger Franklin, an executive at Library House.
However, the study, released Monday, said that Europe still lags the U.S. in terms of venture capital financing of innovative startups in the IT sector. The amount invested in Europe last year was a fifth of the amount venture capitalists plowed into new American ventures, it said.
It also warned that the European venture-capital market could soon be overtaken by emerging economies. “China is set to match European venture capital investments within two to three years and India is likely to follow within four to five years,” the report concluded.
“With impressive growth rates of the venture markets in China and India, Europe will have to ensure strong and effective support for innovation to maintain its strong position as a global center for investment,” Franklin said.
The study was released at a Microsoft-sponsored gathering of 140 venture capitalists and European startups at one of the software giant’s offices in Brussels.
“Small technology companies have a big impact on jobs and growth but they need our help,” said Jan Muehlfeit, chairman of Microsoft Europe.
“Today’s summit of venture capitalists and high potential startups in Brussels has brought the two communities closer together and shown what can be achieved when European entrepreneurship meets capital,” he added.
Library House was set up in 2002 to provide investors, private companies, governments, universities and consultants access to the most current information and analysis about publicly listed companies.
It soon started to gather information about privately owned companies and now claims to be the only source that provides an accurate picture of Europe’s fastest growing privately owned firms.
