Why 2014 was a fantastic and terrible year for venture capital in Europe

The latest numbers from Dow Jones VentureSource on venture capital in 2014 contain some reasons for Europe to cheer and some data that might have the region nervous about the future.

First, the good news.

In 2014, European companies raised €7.9 billion ($8.8 billion) in 1,460 deals. That’s 11 percent fewer deals but an increase of 25 percent in euros invested.

Also, Europe saw 55 venture-backed IPOs in 2014, triple the number in 2013. In addition, there were 201 acquisitions completed in 2014, up 21 percent from 166 in 2013. Good signs that mean more money flowing back into the startup ecosystem.

But!

That big year in venture funding was somewhat muted because, after two big quarters, venture financing dropped 24 percent in Q4 compared to Q3.

And more bad news: The number of VC fund closings in 2014 fell 4 percent from 2013 to 76. The total amount raised dropped 18 percent in 2014 to €3.4 billion ($3.8 billion). The drop was especially steep in Q4, when the number of funds that had closings plummeted 51 percent from the same period a year ago.

This could be a worrisome sign for the future. And while it’s hard to know all the details of how the financing is put together, the sharp drop in the value of the euro against the U.S. dollar since last summer raises another potentially ominous flag for European startups seeking to expand overseas.

The first quarter of 2015 could well tell us whether the European VC scene just hit a bump in late 2014 or whether it is headed toward a bigger ditch.

Source: Dow Jones VentureSource