Venture capital trumps private equity in downturn
Article Date: Jun 22 2009
Growth capital is relatively resilient
Financing for growing businesses is proving more resilient in recession than private equity activity, according to Europe-wide research.
Fund closings in the first quarter of the year totalled €2.5 billion (£2.1 billion), compared with €19.6 billion in the previous quarter, a fall of some 87 per cent.
However, the venture and growth capital component of this fundraising fell only 68 per cent, from €2.5 billion to €800 million, while the portion raised by buy-out funds plummeted 92 per cent to €1.3 billion, according to data from the European Venture Capital Association (EVCA).
Hanneke Smits, chair of EVCA’s investor relations committee, says, ‘These numbers reflect the full force of the economic downturn that private equity firms and their portfolio companies are contending with.’
Smits adds that private equity firms are concentrating their resources on supporting existing portfolio companies.
