The digital media industry has made it to the end of 2009 battered but alive, and execs will be hoping 2010 can bring far more in terms of VC spend. According to the stories in our VC channel, in 2008 we covered 92 deals totalling £366.5 million, compared to £543.1 million in 2009 — that’s a 32.52 percent drop year on year.
Is this further evidence that the freezing of liquidity in credit markets and the caution of banks in the recession has hamstrung digital innovation in the UK by depriving new businesses of cash? Or, does it merely show that, as late as 2008 – eight years after the dotcom bubble burst – VCs, PE groups and banks were throwing money at startups with a little more enthusiasm than is wise?
The biggest deal of the year was posh grocery delivery business Ocado, which recieved £30 million from former US vice president Al Gore.
But what does this mean for start-ups in 2010? The news may not be all bad for investment-seekers, and here’s why…
— Things are getting better: VC media and tech spend from January to September was nearly the same as the year before, Ascendant reckons. After a Q2 that was the worst on record, Q3 VC outlay jumped 23 percent, says Dow Jones’ VentureSource.
— Money is still around: Since January three of the big European VC houses — Balderton Capital, Atlas Ventures and Index Ventures have launched funds totaling £746.4 million, several smaller funds like Brent Hoberman and Paul Birch’s PROfounders are still open for business.
— Online gaming hope: If recent funding deals for Russian MMO games maker Nival , German casual games company Wooga and game-focused social network Playfire are anything to go by, online, social games is a sector that will keep on growing next year and keep attracting investors’ money. You wouldn’t bet against another UK games start-up repeating the $375 million buy-out secured by Playfish last month.
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