Value of venture capital investment soars in the South West

The third quarter of 2023 witnessed a 482 per cent increase in the value of venture capital (VC) investment in South West businesses, soaring from £114m to £663m, according to KPMG’s venture pulse report.

Despite this surge, the volume of transactions saw a decline, dropping from 31 to 23 compared to Q2. Bristol remained a key player in the region, contributing significantly to overall investment activity.

OVO Energy, headquartered in Bristol, played a substantial role in this boost, securing a noteworthy £599m in funding.

This funding round significantly contributed to the increased total investment value in the South West.

Nationally, the value of VC investment in the UK remained steady in Q3, amounting to $5.2 billion (£4.2bn).

However, deal volume experienced a decline, with 469 deals completed during the period, marking a 34 per cent decrease from Q2 and a 44 per cent decrease from the same period last year.

Amidst an uncertain geopolitical and macroeconomic environment, including concerns about valuations, potential returns, lack of exits, high-interest rates, and other factors, the time to complete VC deals significantly slowed across most regions globally during the last quarter.

David Williams, office senior partner for Bristol at KPMG UK, said: “While the recent picture reflects a measured approach from investors amidst geopolitical and economic uncertainties, the continued injection of substantial investment into South West businesses underlines their resilience and growth potential. The market is receptive, and businesses are showcasing strong fundamentals, especially those in the technology and consumer sectors, significantly driving investment and remaining buoyant in what is a challenging market.

“The jump in South West VC value, significantly strengthened by a huge funding round for OVO Energy, comes against the backdrop of a slow deals market nationally. Investments are taking longer due to heightened investor caution. Notably, investors are now looking for clear paths to profitability and are asking more questions before committing to deals.”

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