Venture capital investment into UK tech companies rose in Q2 2017 ($1.42bn) when compared to the previous quarter ($1.15bn).
That’s according to the latest Venture Pulse Q2 2015 report produced by KPMG Enterprise, which also found that the UK saw a total of 189 VC investments made during Q2 – compared to the 258 closed during Q1.
Patrick Imbach, head of KPMG’s Tech Growth team in the UK, commented on the findings: “The standout transaction of the quarter was undoubtedly Improbable’s $502m investment from SoftBank, one of the largest funding rounds ever made by an early stage European tech firm.
“I think particularly when you consider the risk profile of the business, it’s not an exaggeration to say this was a ‘one of a kind’ investment,” he noted, adding: “It shows how UK’s ‘deep tech’ sector is catching the attention of investors from around the globe, and is a timely reminder that tech investment in post-Brexit Britain absolutely can, and will come from outside Europe.”
Imbach then went on to note that despite gathering economic headwinds and the uncertainty created by the UK’s impending Brexit, the early-stage company scene remains quite strong.
“High investor standards and increased diligence seem to have the effect of heightening the quality of companies, their management teams, and their business strategies as they come to market.”
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VC investment in Europe
According to the report, Europe’s VC landscape mirrored that of the UK, with deal count dropping from 760 to 589 quarter on quarter.
In fact, the amount of deals slumped to a six-quarter low, and approximately 40% of the peak high seen in Q1 2015.
Despite this, the report says that VC investment across the Continent remained relatively robust, with some $4.1bn invested – a marginal increase compared to Q1’17.
Imbach explained: “The trend seen both in the UK and across wider Europe of a falling deal count, but increasing deal value is perhaps indicative of investors becoming more discerning at the Angel and Seed stages while investment accelerates in later-stage companies with more proven business models and market traction.
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“In addition, investors in Europe seem to be particularly demanding of their portfolio companies in follow-on rounds – Europe was the only world region where an uptick in down rounds was observed this quarter, indicating that investors may be willing to continue to fund companies, but on terms that realistically reflect the intrinsic value of the business.”
Additionally, the report found that corporate VC participation in Europe surged to its highest ever level, accounting for more than 20% of the deals closed.
The total capital invested by CVCs, however, decreased. Despite this, the report argues that the enhanced level of participation shows that corporate interest in innovative technologies is becoming a burgeoning trend.