Vive le web! European consumer tech startups fuel VC growth

With all the doom and gloom about the European debt crisis, it’s easy to underestimate the impact of early-stage tech companies, sprouting up in hubs like London and Berlin. These startups have fueled a 14 percent increase in venture capital investment in Europe, compared to the same period last year.

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Figures released today by Dow Jones VentureSource reveal some surprising insights about the startup economy in Europe, and provide some cause for optimism.

One recent phenomena is the trend for investment in consumer internet. A few years ago, young enterprise companies like Autonomy, later acquired by HP, dominated the market. Now, according to the data, consumer services experienced the greatest gains of any industry, raising a mammoth €463 million (equivalent to $567 million) through 72 deals. Almost two-thirds of the capital went to consumer information services, which include social media, video and online entertainment, and search companies.

But it’s not all good news and celebration this quarter. Deal activity fell 20 percent due to the disappointing exit environment. Only three companies went public this quarter, half the number of IPOs recorded in the first quarter of 2011. According to Dow Jones, venture capital investment totaled €2.2 billion for 550 deals, a 10 percent decline in deals compared to this time last year.

Read about how Facebook’s long IPO casts a shadow over U.S. venture capital

In part due to tariff cuts in Britain, there were also deep declines in investment in the renewable energy and healthcare sectors.

The UK remains the top destination for startup activity and investment, followed closely by Germany and France.

Top Image via Flickr