Venture Capital Spend on European Startups Drops by $1.5bn

Money-dollar-notes.jpgVenture capital investment in European technology startups has fallen by over a third year-on-year, dropping from $4.3bn (£3.3bn) in Q2 2015 to $2.8bn in Q2 2016, according to figures from research firm Pitchbook.

Despite the spectre of the Brexit vote hanging over the UK during this period, UK startups received significantly more funding that other European firms during Q2 2016, bringing in $994m in investment, and making up over a third of all European cash.

Among the UK startups to receive funding during this period were fashion website Thread and customised childrens book producer Lost My Name, which raised £4m and £3.4m respectively during the quarter.

Globally, venture capital investment was up 20 per cent year-on-year, with $40bn invested during Q2 2016. However, this figure was skewed by a small number of exceptionally large rounds, such as Ubers $3.5bn funding round powered by investment from Saudi Arabias sovereign wealth fund.

The number of companies receiving investment actually fell 47 per cent year-on-year, suggesting that investors are focusing larger investments on a select number of companies that guarantee returns, rather than spreading a wide net of smaller investment in diverse businesses.

However, funding for later stage tech companies fell by over half, from $2.8bn to $1.2bn, while funding for early stage tech companies increased slightly from $351 to $398m, indicating that there is still considerable pressure to be seen as an early investor in exciting new companies.

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