GM leads the way as venture capital deals see a second quarter surge
Greater Manchester led the North West in achieving venture capital investment during a busy second quarter.
The value and volume of venture capital investment in the North West both increased in the second quarter of 2023, according to KPMG’s latest Venture Pulse Report.
The report, compiled by PitchBook, found that a total of £165m was raised by North West businesses between April and June, up by 145% on the £67.3m raised in the first three months of the year.
Deal volumes in the region increased modestly quarter-on-quarter, with 20 deals being completed in quarter two, up from 18 in the first quarter.
Businesses in Greater Manchester accounted for a significant majority of the total value of deals made, with £146m raised across eight deals.
Altrincham-based biotech company, Ascend Gene & Cell Therapies, led the fundraising, securing a £116.4m capital injection for its gene therapy manufacturing technology.
At a national level, VC investment into the UK remained stable in quarter two, as investment levels start to find a new normal following the record levels seen in 2021 and early 2022.
£3.2bn was invested in UK businesses between April and June, with 551 deals completed during that period, down from £3.6bn from 715 investments in Q1.
Warren Middleton, Manchester office senior partner and lead partner for KPMG’s Emerging Giants, Centre of Excellence in the UK, said: “Set against a backdrop of a challenging economic climate, it’s encouraging to see VC investment in the North West remain robust in the second quarter of the year.
“Whilst a few significant deals have disproportionately contributed to the region’s investment value, the underlying levels of VC activity are stable and point to sustained investor confidence in the North West economy.”
He added: “A number of significant deals made outside of the two main cities of Manchester and Liverpool also bodes well for the region as a whole.
“Nationally, VC investors have become far more cautious with their spend, and climbing interest rates are raising the bar on return requirements and causing investors to question their capital asset allocations.
“Investors will continue to prioritise companies who are well positioned to grow and thrive, even in the changed business environment. Overall VC investment will remain relatively steady going into Q3.
“Ongoing geopolitical challenges, lack of confidence in exit opportunities, economic concerns and the continued potential for interest rate hikes will continue to impact deal volume despite ongoing record liquidity.”
Gobally, with no end in sight to market challenges, VC investors continued to hold back from making large mega-deals and late-stage deals in the quarter.
More broadly, the steep decline in late stage deal value and number of deals – particularly for Series D+ deals – continued in Q2 ’23. This continued pullback was not a surprise given ongoing investor concerns about valuations and a lack of exit opportunities, the report found.
In the UK more than 60% of completed deals in the first half of 2023 were at seed, early and series A stage, showing that innovative, high growth potential businesses are appealing to investors.
