The amount of equity raised by start-ups and scale-ups in the third quarter of 2022 dropped by 57 per cent year-on-year, according to research.
A total of £2.76bn was invested by UK venture capital and private equity firms in Q3 according to Beauhurst, the lowest quarterly figure since the third quarter of 2020 and a 27 per cent decrease from this year’s Q2.
There were just 518 deals recorded during the quarter, the lowest amount since the same period in 2019.
Rising interest rates, a partial recession and rising inflation have been cited as some of the reasons for the drop in fundraising.
However, the total invested in the year so far paints a rosier picture. At £15.6bn to date – thanks particularly to a record-breaking Q1 – it’s the highest amount raised over the course of a year barring 2021, and follows pleasing performance in the US markets.
There were eight megadeals (deals worth over £50m) in Q3, with four cleantech businesses cleaning up 57 per cent of the funding. Megadeals included Gridserve (£200m), Connected Kerb (£110m) and Tesseract Energy (£67.7m).
London-based companies accounted for 52 per cent of deals and 57 per cent of all funding, while Yorkshire and the Humber was the only region in the UK to see an uptick in deals from the previous quarter.
“Some of the investment highs of 2020 and 21 were so high that any fall was going to look steep,” Beauhurst’s head of research and consultancy Henry Whorwood summed up for Growth Business. “But another way to look at those highs is as aberrations. We’re back to 2018 and 2019 levels, and back then we published those numbers with pride as reflecting a thriving start-up ecosystem.”
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