LONDON — Investment in British startups and growth-stage companies remains “stagnant,” according to new data from investment tracking platform Beauhurst.
Investment increased by 2.2% in the first quarter, hitting £938 million. Deal numbers also increased by 2.7%. But while there was a quarterly improvement, both the total investment and the number of deals were well below figures recorded in the first quarter of 2016.
Deal numbers also increased by 2.7%. But both the total investment and the number of deals were well below the figures recorded in the first quarter of 2016.
Beauhurst says in its latest report, released tomorrow: “Despite a small improvement in deal numbers, equity funding in the UK is still stagnant when compared with its steady growth pre-2016.”
Pedro Madeira, Head of Research at Beauhurst, told Business Insider: “The prospects for UK startups are still bleak compared to previous years.”The biggest investments in the quarter were a £83 million funding round for startup bank Atom and £82 million of investment for peer-to-peer lending platform Funding Circle. The three other top five deals in the first quarter were all in the life sciences and medical technology space.
The average deal size in the first quarter declined by 5.2% to £3.6 million, as activity shifts away from late stage investing towards more early stage seed investments. Madeira said: “It is encouraging to see signs of early-stage growth in deals, and equity crowdfunding in particular continues to grow.”
There were 80 successful crowdfunding campaigns in the quarter, an 11% rise on the previous quarter. £45 million was invested through crowdfunding.
Seedrs was the most active platform, with 35 fundraises on its platform. Jeff Lynn, CEO and cofounder of Seedrs, told Business Insider: “Seedrs has been the most active investor into private companies in the UK for over a year now, even overtaking private equity. We have reported record deal numbers every quarter since the start of 2016 with a considerable uplift since the referendum last summer.
“This is a great endorsement for the equity crowdfunding space and Seedrs looks forward to continuing to lead the way across the rest of the year with some really exciting companies due to raise in the next quarter.”
Crowdcube was close behind with 29. Crowdcube raised £23 million for companies in the first quarter, meaning it is on track for a record year in 2017.
Crowdcube’s cofounder Luke Lang said in an emailed statement: “This record start to 2017 shows how established growth-stage businesses, seasoned entrepreneurs and institutional investors trust Crowdcube with the big, more complex fundraises, while investors know we’re the place to find exciting, often VC-backed, investment opportunities.”