Venture capital investment in UK scale-ups rocketed by 22 per cent in 2019 to hit more than £9bn last year, according to research.
Overall, there were 1,648 VC investments in UK scale-ups – companies which have received as least one round of Series A investment – according to PitchBook.
However, VC investment dipped in the last three months of 2019 at nearly £2bn, slightly down on the highs seen over the summer.
VC investments in later stage businesses, particularly in the financial services, biotech and healthcare sectors, drove most deals completed.
There was, however, a continued decline in early and seed stage deals.
Tim Kay, director with KPMG Private Enterprise, said “Our scale-up businesses have had a fantastic year and continue to fly the flag for British innovation, attracting investment from all over the world.
“Despite the political uncertainties, entrepreneurs had no problem closing mega-deals, as VC investors focused on later stage companies in sectors in which the UK is seen as world leading.
“Access to funding is a foundation for growth, and domestic innovation could be impacted if our next wave of entrepreneurs fail to attract the capital they need to grow now. At best, it will slow their growth – at worst, it will make them uncompetitive on a global stage, leading them to relocate or become unsustainable.
“The large amount of dry powder VC investors have available suggests there could be a significant amount of capital deployed quickly now that there is greater political certainty in the UK. Whether or not early stage deals make a comeback this year remains to be seen as we may be seeing a fundamental shift in investor appetite.”
Record number of unicorns born in 2019
Last year also saw a record number of VC-backed unicorns, (companies valued at $1 billion), with 110 new unicorns created globally, including the UK’s Babylon Health and Cambridge-based CMR Surgical.
Europe set a record, with 18 new unicorns in 2019 compared with 12 in 2018 and only six in 2017.
The US however accounted for more than two thirds of these unicorns, with 73 in total including Ripple, Bright Health, Duolingo, Scopely, and Next Insurance.
Record European VC investment
Europe shattered its previous annual high of VC investment, attracting $37.5 billion in VC investment in 2019 compared with $28.2 billion in 2018. Germany, France, and Spain reached new annual records for VC investment in 2019.