Global Themes

What ails European Venture?

At the TechVenture Asia conference, I picked up these depressing statistics:

The data comes from Cambridge Associates who have also included their data from 2004 to get a sense of perspective:

From Cambridge Associates’ 2004 report: “In aggregate, the historical performance of private equity partnerships in Asia has been disappointing…Asia remains a region of greater potential than of actual opportunities for private equity investors, but that potential is gradually becoming more tangible, less will-o’-the-wisp and merits close attention in light of the regions dynamic growth prospects…”

Mean End-to-End Performance as of 31 March 2004*

	One Year	Three Years	Five Years	Ten Years
U S Venture Capital	3.03%	-19.62%	46.36%	38.57%
U S Private Equity	27.91%	3.86%	5.04%	11.06%
European Venture Capital	-4.44%	-19.59%	-3.51%	6.00%
European Private Equity	27.98%	16.68%	14.62%	16.25%
Asian Venture Capital & Private Equity combined	22.96%	-0.14%	1.38%	0.49%

Things have obviously come a long way since then for Asia…here are the updated performance figures for 2006:

Mean End-to-End Performance as of 31 March 2006*

	One Year	Three Years	Five Yrs	Ten Years
U S Venture Capital	13.8%	9.9%	-6.5%	39.5%
U S Private Equity	31.8%	27.3%	12.2%	13.4%
European Venture Capital	1.9%	-1.0%	-9.0%	0.8%
European Private Equity	31.5	30.2%	22.3%	20.9%
Asian Venture Capital & Private Equity combined	24.4	20.8	7.0%	4.7%

* Pooled end-to-end mean return net of fees, expenses and carried interest as calculated by Cambridge Associates

Whats dragging European venture down?

November 2nd, 2006 Posted by Shantanu | Emerging Markets, Europe and Asia, Venture Capital, Venture Capital in Europe, Venture Capital in US | no comments

Live Blogging at EVCA, Barcelona

EVCA Logo Javier Loizaga, EVCA Chairman inaugurated the conference this morning reminding everyone that a record amount had been raised by European VCs in ’05 – the highest ever if we ignore the “irrational” years of ’99-’00.Paul Deninger, Vice Chairman, Jefferies & Company, Inc. Chairman, Jefferies Broadview made a Presentation on current state of technology finance titled, Is this the European decade?” some salient points:

NASDAQ is still the foundation of how people “feel” about the technology market

Amount of activity is not even close to IPO activity pre-bubble (on NASDAQ)
By contrast, European markets showing strong activity (AIM as well as EuroNext)
But in terms of “quality deals ” (raise > $20m), NASDAQ has sustained its lead over Europe
Only one of the Top 10 Global IPOs last year was done in NY (compared to 4 of the top 10 in 2000 in US; of which 2 were non-US) – SOX to blame?
Liquidity on AIM for market caps of £50-70m is comparable to NASDAQ (this is stunning news…)
Tech M& A has been flat since 2001 in US but Europe is looking better (better than every year in fact except ’99 – 00 and in terms of amount/value better than every year except 2000)
The mood in Europe is in the right direction
Likely exit path for US backed companies has moved decisively in favour of M&A

Keep Reading…

October 12th, 2006 Posted by Shantanu | China, Conferences and Panels, Europe and Asia, Globalization, India, Venture Capital in Europe | no comments

The VC Stampede to Asia

I am pretty sure that this is not a complete list but it is interesting nevertheless. Below are names of some very well-known VCs who formally declared their intent to invest in Asia in the last twelve months.

This move towards investing beyond the “2-hour drive” periphery signals a profound change – whose ramifications will continue to be felt for years. Yet, I find it odd that there are not more people commenting on it.

More remarkable than the impressive list of names is the conspicuous absence of European VCs from the list.

In April ’06, the EVCA did a survey of European VC firms that showed almost half (47%) had no activity at all in Asia (either via portfolio companies or through direct investments).

Why are European VCs so cool/cautious on Asia?

Partly it could be that Asia is still viewed as a “supplier of good or services or (an) outsourcing region” and European investors see neither market opportunity nor any signs of innovation happening there (they are wrong on both counts, of course).

As I was searching for some answers, I came across this gem (buried deep under news archive on Walden International’s website)

It was written in Feb ’01, I guess weeks before the markets began to wobble. It mentioned a few reasons why US VCs were not keen on Asia (this was then). Some of those points resonate in Europe today (excerpts).

1. Distance

“Distance is one key factor keeping the creme de la creme of Silicon Valley VCs from setting up offices overseas. …Sequoia Capital founder Don Valentine said: “In 30 years we haven’t convinced ourselves to set up a presence in Boston. It’s a very difficult business to be good at consistently over a long period of time, and it requires a lot of thoughtful and integrated decision-making….”We make enough mistakes on investments we make here (in Silicon Valley), that we’re not comfortable we can (be successful) 3,000 miles away, never mind 8,000 miles away.”

Keep Reading…

August 17th, 2006 Posted by Shantanu | Europe and Asia, Venture Capital in Asia, Venture Capital in Europe, Venture Capital in US | one comment