European investors' relative enthusiasm for venture capital has fallen by two-thirds as a result of poor returns, according to a survey by Goldman Sachs and Russell, the multi-manager.

The biennial survey of the world's 491 largest tax-exempt investors, principally pension funds, drew responses from 325 institutions. Only 13% of the 71 European respondents saw venture capital, or early-stage investments in unlisted companies, as the most attractive area of private equity. This is a sharp drop from 2001, when 42% of respondents said they favoured venture capital. In contrast, 61% of European respondents now favour buy-outs, up from 28% in 2001.