Ebb & Flow

Six substantial venture rounds - three each in the U.S. and Europe - brought in $166.1 million last week, but the differences between the rounds illustrates the continued lag in European funding. Thus, three U.S. companies raised a total of $109 million in rounds of $29 million, $32 million and $48 million, while the three European rounds were $18-$20 million each. Not surprisingly, the U.S. companies expect to get further on the money.

The average amount raised per European investment so far this year is $13.2 million, equaling the 2001 average and up $1-$2 million on the intervening years. European venture rounds total $688.3 million year to date. So far this year the average U.S. venture round is $22.3 million, and a total of $2.5 billion has been raised (see "Europe Rising").

"We may have seen an increase in the average European round, but cash does not go further in Europe, and companies have either thinner pipelines or have to come back to investors sooner," said Denise Pollard-Knight, head of healthcare private equity at Nomura.

Thus she argued that the average European round has to come closer to U.S. levels if Europe is to capitalize on its biotech opportunities. "We still have too many European companies raising too little cash on the basis that they can IPO at the earliest opportunity," she said.

For the remainder of the year, both Pollard-Knight and Andrew Fraser of 3i are confident that funds will continue to flow to the private sector. "From what we see in the pipeline, VC investments in Europe should comfortably top $1 billion this year," said Fraser, director of the U.K. healthcare team at 3i.

However, both Pollard-Knight and Fraser think that not enough will go to early stage plays, expecting the majority of the rounds to be series C or D.

So far this year, the majority of European activity has been in series A and B rounds.

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