Record VC investment for Northern scale-ups

Manchester and Salford skyline. Credit: Chris Clarke

Businesses in the North attracted £315m in Venture Capital (VC) investment in Q1 of 2021.

That’s according to KPMG’s Global Venture Pulse Survey.

There were 37 deals in the region representing 9% of all UK deals by volume during the quarter, and 10% of all UK deal value.

The most significant investments in the North West in Q1 were Manchester-based Matillion, which secured £58.5m from a group of investors, and LDC’s £30m investment in Rochdale-based Wireless CCTV.

Nisha Sharma, M&A director at KPMG in the North West, said: “The North proved its resilience and the strength of its offering against the challenging backdrop of 2020. To see it attract record levels of investment in the first quarter of 2021 off the back of its performance then is credit to the character of businesses here and shows the raw ingredients are there for future success.

“While economic risks still exist, particularly with inflation being a real worry and the gradual withdrawal of government support measures, businesses in the North will be feeling confident of growth in the coming months.

“Those with strong management teams, robust tech-enabled platforms and well-scoped business plans in place will be best-positioned to attract the fundraising needed to drive growth going forward.”

The report found that more than £5.1bn was invested in UK scaleups in the first three months of 2021, up 21 per cent on the previous quarter.

The UK maintains its title as the jewel in the European crown, with seven out of the 10 largest deals in the region.

Interest and valuations for fintech businesses continued to accelerate in Q1, with £1.9bn raised in VC investment.

Three UK based fintechs raised large rounds, including LendInvest (£500m), Checkout.com (£325m), and Rapyd (£217m).

With its £11bn valuation, Checkout.com became the most valuable fintech company in Europe in January before Klarna’s raise put it at a £22bn valuation.

Bina Mehta, Chair of KPMG UK and head of the KPMG’s Emerging Giants practice observed: “The UK continues to be the powerhouse of Europe when it comes to attracting investment in fast growth innovative companies.

“While the number of deals taking place in the first quarter of the year was down by 23% on Q4 20, it was our ability to grow and nurture large innovative businesses that attracted VC investors from across the globe.  Average deal size is larger, continuing a trend in later stage investment.

“There is a huge amount of capital still available for businesses with strong management teams and proven growth plans.

“Following the global pandemic, the global VC market moved at an incredible pace, with £92bn invested in innovative companies globally.

“Continuing to focus on enhancing our competitiveness post Brexit is key, but supporting our disruptors, particularly early-stage businesses will be crucial in order to continue to develop our ecosystem and maintain our global position as leaders in innovation.”

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