Analysts disagreed this week as to whether Europe was catching up with the US in terms of venture capital investment in the high tech industry.
According to a new survey by the National Venture Capital Association (NVCA), some $30 billion in private equity was raised in Europe last year compared to $85 billion in the US.
But John Taylor, director of research for NVCA, which conducted the survey with Venture Economics Information Services, said: "While the difference is large, industry insiders said Europe is catching up to the US in terms of high tech entrepreneurship and its companion industry, venture capitalism."
Giga Information Group analyst, Rob Enderle, disagreed, however, saying that the venture capital market was pioneered in the US and "hasn't migrated across the pond yet".
He added that Europe was trailing behind substantially and conditions were not as conducive to the activity as they were in the US. "Europeans are much more likely to get their venture capital here than to build it over there," he claimed.
But the NVCA study also indicated that more companies went public in Europe during 1998 than in the US, and more than 500,000 new companies were formed in Germany alone, with about 300 of those currently about to make initial public offerings.
In the US, however, venture capital investments rocketed to $7.6 billion in the second quarter of 1999 - a higher figure than the entire first half of 1998. Internet related investment continued to dominate the technology sector, with $3.9 billion being spent on 393 companies from a total of 958, although venture capitalists also sank $1.68 billion into 179 content and ecommerce companies.
NVCA's Taylor said: "Venture capitalists are finding a growing number of opportunities relating to the growth of the Internet and ecommerce. However, venture capital activity is fueling growth in most major industry sectors."
He added that limited resources, in particular a lack of enough partners to manage the range of investments, meant that venture capitalists were investing increasingly large amounts of money with about the same number of investment professionals.
As a result, the average deal size in the second quarter soared to $7.93 million per round from $4.96 million in the same quarter last year.
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