Venture capital injected into start-ups falls in first half of 2013

The amount of venture capital injected into the UK’s start-up businesses declined during the first half of 2013, with Germany and France closing the gap despite the UK still receiving significantly more venture capital than any other European country.
 
New British businesses received $656m in venture capital between January and June 2013 – 15 per cent less than the previous year.
 
Simon Cook, chief executive of venture firm DFJ Esprit, which compiled the figures using information provider, VentureSource, said: "The data suggests that there is a finite amount of capital.
 
"A lot of money that has been in the UK in the last couple of years has been from US investors or City-based institutions. It’s been more venture tourism than venture commitment."
 
Early-stage investment in UK start-ups has increased considerably in the last decade, providing the foundation for internet-based businesses to succeed, particularly near London’s rapidly-expanding Silicon Roundabout.
 
However, Germany and France have also made investment in their technology sectors a priority.
 
There is hope within the Government’s Tech City Investment Organisation that the decline in venture capital funding in the UK will simply be offset by angel investors and innovative crowd-funding platforms.
 
According to a recent survey by GfK published earlier this year, London start-ups rank access to capital as their second-biggest constraint to expansion – behind the availability of adequate skilled labour.
 
Haakon Overli, managing partner at Dawn Capital, a London venture fund, said: "There is simply less money around as some funds are coming to the end of their investment periods, and fewer managers are closing fresh funds."
 
Venture capital funds largely operate in 10-year cycles, with investments occurring in the first half of that timeframe.
 
These figures place even more importance on the government’s Business Bank, which is expected to inject further funds to aid SMEs next month.

Date published 22 Jul 2013 | Last updated 22 Jul 2013