A report created by our friends at Ascendant Corporate Finance reveals some fascinating facts and statistics about current investment trends in the UK (article below), naming FinTech and FashTech as two of the biggest internet sectors VC’s are pouring investment into.
Between January and June this year, 22 FinTech businesses received just under £300m from investors – more than the combined totals for Software and Cleantech. We have recently completed a number of assignments in the FinTech sector, for companies which are disrupting the retail banking and payments space. Furthermore, we have been extremely busy placing senior-level candidates for FashTech clients, a space for which VC’s have an increasing appetite when it comes to investing. Although this sector has yet to achieve “the scale that requires the type of ‘super investment’ (ie >£10m) deals that are more common in FinTech”, there are larger investments being made into FashTech companies, such as FarFetch which has raised £39m to date. This suggests that this may be about to change.
Data courtesy of Stuart McKnight from Ascendant Corporate finance.
Investment Trends in Q2 2014
The simple headline is that in Q2 2014, £320m (vs £192m in Q2 2013) was invested in 84 deals (69) of over £0.5m by 117 investors (82). These deals bring the totals for the year to date to £856m (£479m) and 170 investments (128). This represents 93% of all funds invested in the whole of 2013.
The clear phenomenon of 2014 (so far) has been huge growth of investment in internet/mobile service companies. In the first six months of the year, £520m was received by 92 companies in the sector. This compares to £259m invested in 91 internet service businesses for the whole of 2013. In 2014, London has completely dominated the sector taking 88% of funds invested and 79% of number of deals.
The biggest single subsector in this internet group is “FinTech” – financial technology. Between January and June, 22 of these businesses received just under £300m from investors – more than the combined totals for Software and Cleantech. In many ways this simple statement underlines the major shift that has occurred in the VC market over the last 5 years. In 2009, Cleantech took twice the amount of VC money that all internet service companies received. In 2014, investors have new priorities…
Other than FinTech, the only other major grouping amongst internet service investments was in fashion/retail companies. We tracked 16 of these who received £85m. So whilst “FashTech” is a popular area for investment, relatively few of the businesses have achieved the scale that requires the type of “super investment” (ie >£10m) deals that are more common in FinTech.
• In Q2 2014, £320m was invested in 84 deals by 117 investors
• In the year to date, £856m has been invested in 170 companies
• The busiest investors were MMC, Scottish Investment Bank, Index Ventures, Archangels, Balderton Capital, Forward Partners and Imperial Innovations
• 75% of deals involved more than one investor
• Private investors participated in 37% of VC deals, US investors in 10%, Euro investors in 8% and Corporate Investors in 15%
• The 14 biggest deals received 55% of funds invested, included: Farfetch (£39m), Nutmeg (£19m), Ebury (£18m), MyOptique (£16m), Transferwise (£15m), Brandwatch (£13m), Nujira (£12m), Roli (£8m), Ticketscript (£7m), Osper (£6m), Aveillant (£6m), Brightpearl (£6m), Citymapper (£6m) and Currency Cloud (£6m).
• Internet/Wireless Services companies received £180m, Software £65m and Cleantech £17m. £60m was invested in companies that could not be simply categorised
• In the Internet/Wireless Services sector, 40 companies received investment, Farfetch (£39m), Nutmeg (£19m), MyOptique (£16m), Transferwise (£15m), Osper (£6m), Citymapper (£6m) and Currency Cloud (£6m) received the biggest VC cheques
• The largest Software deals were: Ebury (£18m), Brightpearl (£6m), Certivox (£5m) and Intent HQ (£5m). 20 Software companies received VC backing
• Just 5 Cleantech companies raised capital: Cylon Controls (£6m), E-Leather (£5m), Nova Innovation (£4m), Netthings (£1.3m) and Celtic Renewables (£1.2m)
• Outside of the key subsectors, the biggest deals were: Roli (£8m), Aveillant (£6m), MCor (£5m), Nualight (£3m) and Masabi (£2.5m)
• London and Scotland which were responsible for 52% and 11% of deals respectively
• London’s share of the VC money was down from its peak in Q1 to 65% of all funds invested in the UK and Ireland.
• On a city-by-city basis, 45 London tech companies received VC, 8 in Edinburgh and 6 in Cambridge. All other cities or towns had less than 5 deals.