Tornado Insider reports that Venture Funding in Europe drops 36%:

"The surge in venture capital earlier in the year stagnated in the second quarter of 2005. In this week's press release on the European technology venture capital climate, Tornado Insider reported a reduction of venture capital in Q2 2005. 178 deals were recorded for European technology companies raising a total amount of �666 million. This represents a 36% reduction in total investment on the previous quarter. The average deal size (�3.6 million) is back at its Q2 2003 level.

Most deals were done in Software (45), netting a total amount of �121 million. Biotechnology & Healthcare companies raised 44 fundings but remains in pole position for total investment with �269 million. Materials & Nanotechnology was the only category to receive more funding than in the previous quarter with �32.9 million raised by 12 companies.

In the country rankings the UK holds the lead with 38% of total European funding in Q2 2005. Germany remained second with 17% followed by Denmark that climbed to the third place at the cost of France. All countries showed a reduction in the amount raised with the exception of Belgium, Portugal and Austria.

The severe drop in early-stage funding in the first quarter of 2005 bottomed out in Q2 2005. Seed and first-round investments accounted for 28% of the disclosed venture capital rounds in Europe which brings it close to the 2004 average of 29%."