Report: UK tech startups raised $834m in Q3 2016


UK VC-backed startups raised a total of $834m in funding across 110 deals during Q3 2016, reversing a series of quarterly declines since Q4’15, says a new report.

According to the Venture Pulse Report Q3 2016: Global Analysis of Venture Funding report, top UK deals included Deliveroo’s $275m Series E, Darktrace’s $65m raise and Artios Pharma’s $33.2m Series C.

Most deals (59) took place in London, where funding totaled $580m. Cambridge followed with 9 deals and a total of $69.6m raised in total.

UK and Brexit

Although the report says that the implications of Brexit will have long-term ramifications on the UK and Europe, the immediate effects associated with the vote have evened out.

Despite VC investment in the UK remaining relatively lackluster throughout the third quarter of this year, there was a small uptick when compared to Q2 2016. This would suggest that although nervous about the country’s impeding Brexit, investors do not seem likely to change their investment strategies.

Anna Scally, partner, head of technology, media and telecommunications, KPMG in Ireland, commented: “The long-term ramifications of Brexit haven’t been felt yet. Deals are still getting done, but many of these would have been in the pipeline before the referendum. The real impact will likely be felt heading into 2017, as the UK begins proceedings to disentangle itself from the European Union.”

Although the pound sterling has declined in value since the referendum, and this may have caused concern among some UK-based companies, the report says that international VCs may take this as an opportunity to advance in the UK.

“For startup companies that operate in a dynamic and rapidly changing environment, this means Brexit is not likely to be a top concern at the moment. However, a number of VC investors are beginning to evaluate Brexit impacts on a case-by-case basis, while others are looking for companies to address any implications from Brexit in their pitch decks,” adds the report.

Activity in Europe

Europe saw mixed results in terms of performance during Q3 2016. This time period was the second consecutive quarter that saw deal activity increase, while funding dollars decreased, as mega-rounds remained few and far between. The total amount of funding, the report says, stood at $2.3bn across 468 deals.

After plunging during Q1 2016, Seed-stage deals in Europe picked up, rebounding to approximately half of all the deals closed in Q2 2106. During Q3, Seed-stage deals represented 48% of the quarterly total.

Overall, the report says that this decline in VC funding was representative of global market uncertainties, including the pending increase of interest rates in the US and the upcoming presidential election.