Technology sector hits new highs in VC investments

The second quarter of 2012 has seen a rise in the amount of venture capital investments made in UK technology firms, new statistics show.

Investments in businesses such as online delivery service Just-Eat, cloud hosting business Huddle and peer-to-peer lending platform Funding Circle during the second quarter of 2012 has pushed technology allocations up from £234 million in the second quarter of 2011 to £297 million for the same period in 2012.

Findings from corporate finance firm Ascendant shows that 60 UK technology companies were backed by 102 investors in deals worth over £500,000, up from 48 businesses by 70 backers in 2011.

When combined with the first quarter of the year, some £596 million was invested in 124 companies, a sum which is set to outweigh the entire effort of 2011 which saw £786 million injected into 193 firms.

The figures represent the healthiest return from the British technology sector in ten years. Ascendant says that a £600 million sum has not been invested in a six-month period during that period.

The busiest investors in the period were Index Ventures, Cambridge Angels, Eden Ventures, Greylock Partners, the North West Fund and Scottish Enterprise.

Online takeaway service Just-Eat recorded the biggest deal during the three month period when it netted £40 million of growth capital back in April.

Other large deals involved nano-coating developers P2i (£12 million), pet supplies retailer MedicAnimal (£10 million) and online fashion location (£10 million).

Stuart McKnight, managing director at Ascendent, says that a key driver of growth in the market has been the boost in the number of investors participating in deals.

At the lowest point of the market in Q1 2009, only 58 investors committed funds to tech companies in the UK and Ireland. The second quarter of 2012 saw 102 firms close deals.

McKnight adds, ‘The number of active trade investors is also expanding and they are becoming a very interesting and diversified group.

‘For example, in the last 12 months, Ascendant has recorded investments by the World Gold Council and the Energy Technologies Institute in UK tech companies. These, and many other strategic investors, are not so obvious choices for sources of funds but they are very welcome in this market.’

The most active regions for tech VC investments were London and Scotland which were responsible for 33 per cent and 17 per cent of deals respectively. London’s share of VC money amounted to 46 per cent of the funds invested in the UK and Ireland.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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UK Tech Sector