Each quarter during 2013 saw an improvement in deal value and volume, with the fourth quarter rounding the year off by topping £470 million from 171 transactions.

Findings from growing company analysis firm Beauhurst shows that 2013 saw £1.5 billion invested into 652 British companies.

The figure represents a 35 per cent improvement on deal volume from 2012 and 20 per cent more in terms of value.

To provide a greater insight into who money is coming from, and what sectors it is going into, a breakdown of seed, venture and growth deals is revealed below.

Seed investments

A total for four seed-stage deals of over £5 million were closed during 2013, all of which were made in pharmaceutical companies. Private equity funds contributed more than angel networks, with over twice as many seed-stage companies backed by the investor type than in 2011 and 2012.

Top five investors:

 
Kerry Sharp, head of Scottish Enterprise’s Scottish Investment Bank, says:

‘2013 was another positive year for Scotland’s risk capital market.  By investing alongside our private sector investment partners, the Scottish Investment Bank is helping innovative Scottish companies, with high growth and export potential, attract much needed finance in what is still a challenging market.

‘As in previous years, we’re seeing most investor interest in companies from our life sciences, renewable energy and technology sectors. This includes companies specialising in a wide range of technologies from micro and opto-electronics; drug development and medical technology; oil and gas and smart grid technologies as well as exciting new renewable industry projects.  ‘Scotland is in an almost unique position in that we are able to support such variety, particularly with our world class university base. As a result, I’m confident we’ll see even more success in 2014.’

Selected seed deals from 2013:

• Kevin McCloud’s environmental business raises £1.9 million on Crowdcube
• Cambridge spin-out Aqdot gets Imperial Innovations cash
• MabLyte and Watertronix backed by new Mercia Fund pot

Venture investments

Some 2014 investments worth a disclosed £326 million were made in 2013, representing more deals but less capital than the previous 12 months when 191 transactions accounted for £490 million of disclosed capital.

Beauhurst noted a dip in the average deal size, as it fell by 45 per cent to a new ‘historic low’.

Top five investors:

Tim Mills, CEO at the Angel CoFund, says:

‘2013 proved a great second year for the CoFund, bringing some fantastic new tech businesses in to the portfolio alongside some very talented and experienced angels.

‘Over the 12 months we saw several existing portfolio companies raise significant further rounds, including with YPlan with their $12 million Series A. The summer also brought the fund its first exit with the sale of proteomics software business, Non-Linear Dynamics, and was topped off with the IPO of MoBank in December.’

Selected venture deals from 2013:

• Business bank-backed Angel CoFund joins investors at BaseKit
• The North West Fund for Venture Capital closes third £500,000 February deal
• Wedo links up with MMC and Passion to raise new funds

Growth investments

Deals in the growth segment of the market moved past the £1 billion mark during 2013, with businesses at this stage netting two thirds of all UK equity investment.

Top five investors:

Rory Stirling, partner at MMC, says:

‘We are really pleased to have continued to be recognised as one of the most active investors in the UK during 2013, as we were in 2012.

‘Given the quality of the deal flow we see, we expect to continue this in 2014 and expect to announce new deals over the coming weeks. This all bodes very well for the UK as a centre of innovation and entrepreneurship.’ 

Selected growth deals from 2013:

• Index Ventures joins Sir Terry Leahy as investor in MetaPack
• Entrepreneur of the Year Colin Stevens backed by BGF
• Amplience links up with Octopus again

Most active sectors for investment