Northern Venture Capital values fall, but quantity of investment keeps pace

The value of disclosed venture capital investment in the North fell by more than a quarter (27%) in quarter three, despite a significant rise in activity, according to KPMG Enterprise’s latest Venture Pulse report.

VCs invested £60.9m into northern scale-up businesses as quarterly investment fell between July and September. However, that figure represents an improvement on the same period last year, as the overall value of investment grew by more than half (55%) year-on-year.

Despite the quarterly drop in value, investors were highly active in quarter three, increasing the number of deals compared to quarter two 2019 by over two thirds (69%) to 27. The number of deals also grew by a quarter (23%) year-on-year.

With 74 venture capital investments in 2019 to date, the total number of deals in the North this year is on course to exceed 2018 levels.

In Yorkshire, the largest investment involved a £5.1m boost for Leeds-based flea treatment firm Itch, which was founded last year.

Lizzie Smith of KPMG Enterprise, who works with fast growth businesses in the North, said: “With the third quarter traditionally being a slower period for investment, it’s great to see the rate of activity across the North continuing to grow despite current uncertainty. VCs are clearly keeping their books open, although diversifying risk by spreading their chips across the board.

“The North’s tech hubs continue to offer reward for investors and are critical to the future of the regional economy. As such, we hope to see larger, later-stage investment return to the fray in the final quarter to ensure businesses have the resources they need to fuel growth.”