The UK ScaleUp Investment Mission
Venture Bulletin
Every quarter alongside our data partner, Beauhurst, we analyse UK VC activity, to track and comment on all deal volumes and values, between Seed to Series B. You can subscribe to these Venture Bulletins below.
Q3 Bulletin
UK is showing -44% fall year-on-year and -57% fall quarter-on-quarter in the access to Series A VC Funding in Q3.
Q3 Series A data
-
The decline in access to VC funding continues, with Q3 2024 showing a record low - just 32 companies receiving Series A (£2-10m) VC funding…in the whole of the UK.
-
A -43% decline from the same quarter last year and -c.50% from the previous quarter.
-
A record low over the last 6 years.
The ‘Funding Ladder’ is broken
-
Less than 1 in 10 seed-backed (note; not seed-stage) companies are able to access follow-on VC funding.
-
Preliminary data for the 12 months ending 30/09/24 shows 2,179 companies accessed seed funding (<£2m)*, but a record low of 211 companies accessed Series A (£2-10m) VC funding. This is equivalent to 9.7%.
Quarterly decline
-
Trailing 12 months to Sept-24. show consistently low numbers and every 2024 quarter in further quarter-on-quarter decline
-
Culminating in a near-halving of the number of companies accessing Series A between Q2 and Q3.
Annual decline
-
The comparison Year-on-Year quarterly data shows similar decline
Wider interpretation
-
Approximately half a billion GBP less Series A capital is being deployed. than just 2 years ago.
-
General trend (ignoring 21/22), is a broadly flat volume and value of UK Series A deals, c£1bn pa / sub 300 deals pa, but worryingly this is now trending down further still, closer to 200 deals pa.
Conclusions
(i) Seed drop-off
-
UK entrepreneurs struggle to access first VC funding rounds
-
The UK is witnessing incredibly low progression from the startup to scaleup phase, with lack of access to growth funding being cited as a core reason for this (Source: VenturePath ScaleUp Roundtables).
-
Less than 1:10 seed-backed startups access VC funding
(ii) Series A-B decline
-
UK Series A scaleup investment is declining steeply, with knock-on effects later in the investment cycle
-
In 2023 less than 300 startups accessed venture capital funding in a Series A round (first institutional investment).
-
At present rates, 2024 is expected to conclude with closer to 200 companies accessing Series A; around half of the number of companies (409) being VC funded at this stage in 2022.
-
Series B funding for the period was around 140 companies.
(iii) Global competitiveness
-
The UK is losing ground internationally, ranked 3rd best for supporting startups but only 13th for scaleups [OECD] - this ranking is before 2024’s dismal Series A and B statistics are taken into account.
-
We risk losing our lead in startup support, and falling further behind in delivering scaleup support.
-
This lack of pipeline will stifle the UK’s ambition to be globally competitive.
-
The UK needs to better support high potential future scaleups and address the lack of access to growth funding to drastically increase the progression of startups to the scaleup phase.
-
This will create more venture-backed UK successes.
Footnotes
-
The UK ScaleUp Investment Mission was created in readiness for the new Government, and is supported by a consortium of 100+ UK investment ecosystem organisations and leaders; scaleup founders and funders representing £7bn of venture capital and the major banks.
-
High profile private sector organisations and senior supporters are convening to address the scaleup funding gap, through planned interventions to improve UK wide understanding of, and access to, venture capital.
-
Through Ministerial roundtables and meetings, Government and the British Business Bank have been invited to collaborate to play an active role on this mission; to overcome the venture funding accessibility barrier and create a more equitable venture landscape for the founders of today and tomorrow and help create more venture backed UK successes.
-
The UK ScaleUp Mission is coordinated by VenturePath - The UK’s Scaleup Investment Community, and supported by Beauhurst, its data partner.
Graphs
Q3 investment data for The UK ScaleUp Investment Mission courtesy of Beauhurst.
