First quarter investment in UK scale-ups hits £6.9bn

There were 745 deals completed in the first three months of 2022 but number of exits stall

Venture capital investment into UK scale-ups hit £6.9bn in the first quarter of 2022, despite the uncertain macroeconomic environment.

There were 745 deals completed in the first three months of the year, with some of the largest funding rounds seen in health tech, energy, fintech, e-commerce and cybersecurity, according to KPMG’s Global Venture Pulse survey.

See also: UK tech sector reaches $1 trillion valuation 

The latest figures are down on the £7.5bn invested in the first quarter of 2021 and also on every quarter of last year.

London continues to see the most investment (£5.2bn), but the rest of the UK saw promising levels of funding, with over £1.7bn invested across 334 deals, according to research by PitchBook.

KPMG defines a scale-up as a fast growth enterprise that has received at least one round of institutional investment for business growth. VC investment in scale-ups based outside of London has more than doubled since the pandemic – up 59 per cent from £3.3bn invested in 2019.

Notable deals completed in the first quarter of the year included a £142m raise by Nottingham-based Oakbrook Finance, the £94m Series C raise by Edinburgh games developer Everywhere and the £51m Series B funding for Cambridge-based biotech Microbiotica.

Despite this, UK exit activity was down significantly on every quarter of 2021. £2.8bn was raised through 56 exits in the first quarter of 2022, a significant drop on the £11.9bn across 68 deals in the same quarter in 2021.

Warren Middleton, a lead partner at KPMG, said: “Despite concerns around the uncertainty in the economy, and with interest rates rising, the UK continues to demonstrate resilience and adaptability in attracting VC investment and is the jewel in the crown for innovation in Europe.

“The power of our disruptive businesses to deliver impact on a global scale is more important than it’s ever been, and our UK innovators are a real success story. The diversity of the UK scale-up ecosystem and our ability to nurture growing networks in cities up and down the country is playing an increasing role in our success in attracting global VC investment.”

More on UK scale-ups

Number of women starting scale-ups rises by third 

Dom Walbanke

Dom Walbanke

Dom is a feature writer for Growth Business and Small Business, focused on matters concerning start-ups and scale-ups. He has also been published in the Independent, FourFourTwo magazine and various lifestyle...

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