Many companies have had to cut back on spending during the past year due to the economic crisis. However, this year they want to start spending money again, but the banks remain reluctant to readily give out cash. They have become much more careful when checking the operative cash-flow and the debt of the companies. Thus if you have a high debt and your cash-flow is negative, you have to find a VC, because the likelihood is, that banks will not give you any loans.
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European Venture Market blog
Industry news on venture capital, clean tech, life science and ICT
The Predicament of the banks
Monday, June 28th, 2010
Private Equity far from dead
Friday, June 25th, 2010
Even though the numbers are better than last year, this year will be a tough one for the private equity scene. In other European countries, private equity investment has already begun picking up, but Germany usually follows with a delay of up to one and a half years. Private Equity companies are going through a tough time and have to invest over 50% of their own capital and are settling for very small transactions.
However, in the PE scene investors are trying to demonstrate that private equity is not dead. It is argued, that the current state is a consolidation of the private equity market. Within 10 years it will have become a lot stronger, which is a necessity, as private equity companies are an indispensible means to stimulate the German economy.
If you want to read more, please visit: http://bit.ly/cWoRlw (Link to the “Handelsblatt”, article only in German)
Silicon Valley in Europe?
Tuesday, June 22nd, 2010
The Russian president ordered the setting up of an international centre for technological innovation earlier this year. Through this, he hopes to attract young entrepreneurs and venture capital and private equity companies to the region. Construction on offices flats and labs will be started shortly, just west of the capital Moscow.
It seems that Russia wants to build its own Silicon Valley and it is clear that they are doing their best to attract both capital and intellect. They will be offering low rents, income tax exemptions and other perks to those willing to settle down in the area. The organizers are using the following pitch to attract companies: “Come, live, create and do good for yourself, Russia and the whole of civilization” (WSJ, 2010). For the moment, the main focus will be on ICT, Biotech, energy efficiency and nuclear technology.
If you want to read more on the topic, please visit: http://bit.ly/9IHDyu
Hard Times for German High-Tech Startups
Friday, June 18th, 2010
The Economic Crisis has led to a decrease of investment in high-tech startups by 70 percent in 2009. The most hard-hit from this have been the high-tech industries, which mainly need money in the seed phase to get off the ground. In 2009, only 8 million Euros were invested in seed funding, which is detrimental, as especially high-tech startups need a lot of money at the beginning.
The Problem is that investors want security that seed funding generally does not offer; most of the time it means high risk and low cost-efficiency. In Germany the selection of high-tech startups is limited, which leads investors to invest internationally rather than locally. Currently there are too few people risking to become self-employed, which is in part due to the lack of seed-stage investments.
The mentality in Germany has to be changed in order to get the startup motor running again. Financing should already occur in the research phase, which will increase the likelihood of people creating startups, as this idea is being encouraged very early on. With private investors not willing to invest in the seed phase, public investors have to step up and help the high-tech market get back on its feet.
SMEs to lead the way in European economic recovery
Friday, June 4th, 2010
In light of this week being dedicated to European Small and Medium-sized enterprises (SMEs), Antonio Tajani, commissioner for industry and entrepreneurship and vice president of the European Commission spoke on the subject. His main argument was that financial assistance to SMEs is essential for the European economy to recover.
It has been shown that around 45% of Europeans would like to be their own boss, but only 11% of those actually start their own business. If this percentage could be increased, these new creative and innovative companies would rejuvenate the European economic base. This would make it more robust and resilient to economic crisis, like the recent one, and at the same time create many jobs.
Between 2002 and 2008 the number on SMEs increased by 13 % or 2.4 million, which created 9.4 million jobs. In the last two years, following the economic crisis, 3.25 million jobs were lost in the SME area. Of course, SMEs usually can’t help themselves; they need assistance from banks, which recently have often rejected loan applications based on fears of another crisis.
Thus, the onus is on the European Commission to take action and facilitate access to financial assistance. In light of this, the Small Business Act has been created and it “aims to improve the overall approach to entrepreneurship, to irreversibly anchor the “Think Small first” principle in policy making from regulation to public service, and to promote SMEs’ growth by helping them tackle the remaining problems which hamper their development” (http://bit.ly/9Y6be4).
Further measures that the Commissioner aims to take are to create a permanent dialogue between entrepreneurs and financial institutions, a reward system for entrepreneurs and even integrate entrepreneurship into the curriculum at all stages of education. A program called ‘Erasmus for Young Entrepreneurs’, where entrepreneurs can exchange experiences and network, has already been set up.
The Predicament of the banks
Monday, June 28th, 2010Private Equity far from dead
Friday, June 25th, 2010
Even though the numbers are better than last year, this year will be a tough one for the private equity scene. In other European countries, private equity investment has already begun picking up, but Germany usually follows with a delay of up to one and a half years. Private Equity companies are going through a tough time and have to invest over 50% of their own capital and are settling for very small transactions.
However, in the PE scene investors are trying to demonstrate that private equity is not dead. It is argued, that the current state is a consolidation of the private equity market. Within 10 years it will have become a lot stronger, which is a necessity, as private equity companies are an indispensible means to stimulate the German economy.
If you want to read more, please visit: http://bit.ly/cWoRlw (Link to the “Handelsblatt”, article only in German)
Silicon Valley in Europe?
Tuesday, June 22nd, 2010The Russian president ordered the setting up of an international centre for technological innovation earlier this year. Through this, he hopes to attract young entrepreneurs and venture capital and private equity companies to the region. Construction on offices flats and labs will be started shortly, just west of the capital Moscow.
It seems that Russia wants to build its own Silicon Valley and it is clear that they are doing their best to attract both capital and intellect. They will be offering low rents, income tax exemptions and other perks to those willing to settle down in the area. The organizers are using the following pitch to attract companies: “Come, live, create and do good for yourself, Russia and the whole of civilization” (WSJ, 2010). For the moment, the main focus will be on ICT, Biotech, energy efficiency and nuclear technology.
If you want to read more on the topic, please visit: http://bit.ly/9IHDyu
Hard Times for German High-Tech Startups
Friday, June 18th, 2010The Economic Crisis has led to a decrease of investment in high-tech startups by 70 percent in 2009. The most hard-hit from this have been the high-tech industries, which mainly need money in the seed phase to get off the ground. In 2009, only 8 million Euros were invested in seed funding, which is detrimental, as especially high-tech startups need a lot of money at the beginning.
The Problem is that investors want security that seed funding generally does not offer; most of the time it means high risk and low cost-efficiency. In Germany the selection of high-tech startups is limited, which leads investors to invest internationally rather than locally. Currently there are too few people risking to become self-employed, which is in part due to the lack of seed-stage investments.
The mentality in Germany has to be changed in order to get the startup motor running again. Financing should already occur in the research phase, which will increase the likelihood of people creating startups, as this idea is being encouraged very early on. With private investors not willing to invest in the seed phase, public investors have to step up and help the high-tech market get back on its feet.
SMEs to lead the way in European economic recovery
Friday, June 4th, 2010In light of this week being dedicated to European Small and Medium-sized enterprises (SMEs), Antonio Tajani, commissioner for industry and entrepreneurship and vice president of the European Commission spoke on the subject. His main argument was that financial assistance to SMEs is essential for the European economy to recover.
It has been shown that around 45% of Europeans would like to be their own boss, but only 11% of those actually start their own business. If this percentage could be increased, these new creative and innovative companies would rejuvenate the European economic base. This would make it more robust and resilient to economic crisis, like the recent one, and at the same time create many jobs.
Between 2002 and 2008 the number on SMEs increased by 13 % or 2.4 million, which created 9.4 million jobs. In the last two years, following the economic crisis, 3.25 million jobs were lost in the SME area. Of course, SMEs usually can’t help themselves; they need assistance from banks, which recently have often rejected loan applications based on fears of another crisis.
Thus, the onus is on the European Commission to take action and facilitate access to financial assistance. In light of this, the Small Business Act has been created and it “aims to improve the overall approach to entrepreneurship, to irreversibly anchor the “Think Small first” principle in policy making from regulation to public service, and to promote SMEs’ growth by helping them tackle the remaining problems which hamper their development” (http://bit.ly/9Y6be4).
Further measures that the Commissioner aims to take are to create a permanent dialogue between entrepreneurs and financial institutions, a reward system for entrepreneurs and even integrate entrepreneurship into the curriculum at all stages of education. A program called ‘Erasmus for Young Entrepreneurs’, where entrepreneurs can exchange experiences and network, has already been set up.
