Over $55m investment in local startups in Q1 2018
Venture Capital investors pumped more than $55 million into East Anglian startup businesses in the first three months of this year according to Venture Pulse 2018, a quarterly report on global VC trends published by KPMG Enterprise (data by PitchBook).
A total of 10 businesses (nine in Cambridge and one in Norwich) saw investment from global VC investors in this period from an overall total of 204 deals completed across the UK.
The largest local investment was the $22m Series A funding for STORM Therapeutics, which was closed in January followed, by investments for Owlstone Medical, Speechmatics and GeoSpock.
Overall, VC investment in the UK slowed in the first quarter of 2018, following a huge final quarter of 2017, which saw over $2.8 billion invested.
Nevertheless, 2018 still managed to achieve a healthy start, with one $100 million round pushing the nation’s tally over $1 billion. The UK played host to seven of the top 10 European deals in the last quarter of 2017 but managed to scrape just one of the 10 in the first quarter of 2018. Four of the 10 biggest European deals done in the first three months of 2018 were located in Germany.
Charles le Strange Meakin, senior partner and technology specialist for KPMG in Cambridge said: “Globally, there continued to be a significant amount of dry powder in the market during Q1’18, with VC investors feeling under pressure to deploy funds.
“This continued to drive bigger deals and higher valuations. Despite the trend in the number of deals in the UK continuing to drop, we can see that investors are clearly focused on making a smaller number of later stage deals as seen by the three big deals closed in Cambridge.
“As the UK startup ecosystem has matured, a lot of later stage startups have shifted their focus from growth to profitability, and having achieved their goals they are now positioning themselves for potential exit over the next 1-2 years.”
While Brexit uncertainties may have contributed to some of the decline, the strong fundraising in the previous two years and the availability of dry powder might also have also been responsible for the pause. Foreign investors continued to be involved in the biggest investments in Europe – a trend expected to stay through 2018.
VC investment in deeptech, particularly in AI-related technologies, is expected to increase, in addition to autotech and blockchain.
Cryptocurrencies are expected to gain more attention in the near-term, with some regulators likely to move forward with rules to govern Initial Coin Offerings.
The IPO market is also expected to see increasing activity, with Funding Circle planning an exit and others considering their options. Over the longer-term, digital health is likely to get a lot of attention, particularly in the UK where the NHS has recently released a new digital roadmap to accelerate the uptake of digital patient services.
Charles concluded: “We are seeing the healthtech sector continue to get a lot of interest from overseas investors, which is great news for Cambridge.
“We saw three local deals close this quarter which were all in the healthtech space as health monitoring becomes more continuous moving from the doctor’s office to people’s homes, with patient experience becoming more personalised and health-related data more joined up.”
• PHOTOGRAPH: Charles le Strange Meakin