Investment in internet and wireless services firms grew
by 66% in 2008. The year saw the most money invested by high tech
venture capitalists since 2001.
Ascendant, a venture
capital firm that collects statistics on technology investments,
reported yesterday that just over £1bn of new investment went into
mainly communications firms and software firms. This was 15% up on
2007. Some 253 deals involving 262 investors were for more than
£500,000.
Ascendant managing director Stuart McKnight said some believed
that most of the money went to support existing investments. "That
is just not the case," he said. "There were plenty of new
deals."
However, McKnight said that investments in 2009 might be to
support existing investments. "It is a black hole. We are in
uncharted territory," he said.
Despite some gloom, the market is still very much alive and
active, he said. "Balderton, Accel and Atlas have all raised new
funds and we have we have anecdotal evidence that limited partners
[investors in venture capital funds] are reassessing their
commitment to private equity as many other asset classes are
performing so badly. We expect value and volume of VC tech deals to
decline in 2009, but perhaps not as much as some are
predicting."
McKnight expected investors to place their bets according to
idiosyncratic personal views of the market, the technologies on
offer and the people they knew at the firms. He said many venture
capital companies were likely to clean up their portfolios, so this
year there would likely be more mergers and acquisitions than
usual.
"There is still a demand for anything with a green tinge, so
clean technology companies should still get an audience," he
said.
Software companies, which had been hard hit in earlier years,
bounced back in 2008 to claim 41% of deals.
But future investors were likely to be more interested in firms
that were already making sales and wanted new money to speed up
growth, he said.
According to Ascendant, 67 internet and wireless firms attracted
£279m, giving a average deal size of £4.2m. The following all
attracted at least £10m:
- SpinVox, a service that
coverts voicemails into mobile text messages and e-mails.
- MoneyExpert, an
online financial advice website.
- Miniweb, a firm that
combines TV and broadband technologies for broadcasters, online
firms and advertisers.
- Badoo, a multilingual social
network
- Seatwave, an online
ticketing firm.
- Enqii, which suppliers
hardware for gsigital signage firms, and
PlayFish, a social games
site.
Software firms returned to favour with 72 firms (2007:52)
sharing £223m. Key deals were RealtimeWorlds (£25m), Patersons HR
(£20m), Complinet (£19m) and Tideway Systems (£14m).
Communications hardware and services firms dropped in value and
deals as 18 firms shared £57m, Ascendant said.