Venture Capital investment levels in East of England remain flat over past three months


23-07-2019

More than $168 million (£134 million) of Venture Capital (VC) was invested into startups across the East of England over the past three months, according to figures from KPMG’s Venture Pulse Survey.

The snapshot data, compiled by Pitchbook found that 21 deals were completed during Q219 (April – June) the same level as the first quarter of the year.  In total $168million (£134 million) has been invested in the region’s startup community over the last 3months, which was down 26% from the $226 million (£180 million) raised in the first quarter of the year (Q119).  Looking back on the same period in 2018 – which was a bumper year for VC investment in the UK, deal volume in Q219 was down from 28 deals and deal value was down 60% from $417million (£332 million) in the region, as investors take a more risk adverse stance in light of political and economic uncertainty in the UK.

Local deals included a £30 million Series A venture funding for STORM Therapeutics to expand and accelerate its pipelines and build a broader drug discovery platform, there was also a £23.3 million Series B venture funding for Congenica in a deal led by Cambridge Innovation Capital and a £19 million Series B funding for PROWLER.io which will be used to support the company's recent product expansion and growth, with the company continuing to expand into a wide range of industry verticals, including finance, logistics and education.
 

 Commenting on the figures, Mark Prince, Head of Enterprise at KPMG in Cambridge said : "The East of England continues to attract investment from across the globe into our innovative fast growth ecosystem with healthcare businesses particularly in demand.  Like the rest of the UK, the region saw a fall in the value of VC funds coming into the region over the last three months, largely due to concerns around the ongoing uncertainty around Brexit.   The diversity of the innovative businesses that are being born in the East of England continues to drive interest from VC investors and I am confident that the levels of investment will bounce back once the uncertainty of Brexit has been resolved.”

 
The figures, compiled by Pitchbook found that over the first six months of the year, VC investment into the UK has risen by 37% to $5.5bn (£4.4bn) compared to 2018 ($4bn/£3.2bn).  Investment levels for the latest quarter (April – June), were down by 14% on Q119 levels ($2.96bn/£2.4bn), but appetite for UK companies remains strong, with year on year VC investment for the quarter up 3%. Deal volume for the quarter was also down with 279 deals completed during Q219 compared to 324 in Q119.
 
The latest figures reveal investors have not been dissuaded from plying the largest startups in the UK with plenty of VC. However they are not quite as confident on smaller prospects, and are pulling back the pace seen in 2018, seeking instead to invest their cash into those companies deemed ‘less risky’.  This continues a trend that started in late 2017.  Where investors were tempted to place their bets on start-ups, deal sizes were up with 2019 figures suggesting seed rounds have doubled in size from 2018 levels.
 
Commenting on the data, Mark Prince added : “Whilst it is great to see investors continuing to plough premium values into our larger scaleup businesses, the stagnation in investment levels for our early stage startups is concerning.  Just $26.9million (£21.5million) of angel and seed investment was made to UK businesses in the last three months and so we have to ask who is funding the innovators of the future. Unicorns do not just appear overnight: most are around four to six years old before they hit the big time and it is worrying to see this steady decline in early stage funding, which has been ongoing for the last few years. Access to funding is the foundation for growth and UK innovation could be impacted if our next wave of unicorns fail to attract the capital they need to grow now.