There are some bad news and some not-so-bad news if you are a Spanish Internet start-up.

The bad news

Tornado Insider has produced a study of European VC deals in 2007. Blognation has a good analysis of the study, but the bottom line is:

• the UK is still the place to be if you want to get funding. 30.6% of all technology investments targeted UK companies;
• Germany is a distant second to the UK, but it’s getting better. In fact, Germany is now 2nd in Europe, ahead of France, with 16.7% of all deals. (France used to be number 2.)
• France is now 3rd, with 11% of the deals in 2007 – down considerably from its 7-year average of 14.1%.
• The rest of the top 7 includes:
  • Israel — 8.7% in 2007 (average of 8.1% since 2000),
  • The Netherlands — 6.3% in 2007 (average of 5.4% since 2000),
  • Denmark — 4.4% in 2007 (average of 4.1% since 2000), and
  • Sweden — 4.1% in 2007 (average of 6.4% since 2000).

By cities, the distribution of European tech funding is as follows:

For Internet investments, London is clearly the place to be, with 20.8% of all European investments being made there. Paris is second, with 10.7% of all European Internet investments.

Spain is nowhere to be seen on any of these charts. It’s not even mentioned in any of the online summaries, which suggests that it’s largely irrelevant in terms of European VC funding.

The not so bad news

Tornado Insider also reports that there was a lot of VC activity in Spain last month. Spain tends to have an average of 1.5 deals per month, but 5 deals were recorded in July. It’s interesting to note that:

• none of the deals involved first-round financing for an Internet company (there is one second-round financing of an Internet company);
• Biotech and mobile account for 2/3 of the investments;
• The Basque Country and Navarra account for 1/2 of the investments, while Madrid accounts for the other 1/2; and
• There were no investments of any sort in Barcelona, even though 2 of the investors were Catalan.

Following is a summary of the Spanish deals that were reported in July 2007:

• Bilbao-based security software company Panda Security raised €10 million in a new funding round from HarbourVest Partners and Atlantic Bridge Ventures. Previous investors Investindustrial and Gala Capital also participated in this round.
• 3i, the European Founders Fund, angel investor Michael Kleindl and Molins Capital Inversión invested €5.75 million in second-rounding financing for Madrid-based BuyVIP, an invite-only online shopping community.
• Sodena invested €3 million in Navarra-based 3P Biopharmaceuticals.
• Debaeque Venture Capital invested €2million in first-round investment for Kimia Solutions, a Madrid-based media content developer. Kimia aims to develop technology to enable efficient delivery of rich media Internet content to mobile handsets.
• Clave Mayor invested €475,000 in Navarran company Laboratorios OJERpharma, which produces high-quality dermatological pharmacy products.
• Honorable mention goes to Berggi, a US-based developer of mobile messaging services for cell phones, which raised €6.6 million in early August from Avanzit and Adara Ventures. The company has offices in Madrid and is as much Spanish as it is American. Berggi enables consumers to use email, instant messaging, text, alerts and new messaging tools to stay connected with friends, family, and colleagues.

This is admittedly a small sample set that might not be representative of the big picture, but it suggests that pharma continues attracting money, mobile is hot, and investors tend to be cautious about Internet projects.

It also suggests that Barcelona is not the best place to be if you want to get significant first-round financing for an Internet project. It can be done (after all, we got financing from angel investors and from the government). But it’s challenging at best.