Investment Trends in Q3 2012
The simple headline is that in Q3 2012, £183m (down from £205m in Q3 2011) was invested in 48 UK/Irish companies (55) by 75 investors (83). These are substantially down on the Q2 figures we published for Q2 (£297m/60deals). When added to our figures for H1 that makes £778m invested in 172 companies in the year to date. Whilst Q3 is often a quieter period of the year for investors due to the holiday season, the decline in investment is still disappointing given the very positive trends in the first half of 2012.
Perhaps the most worrying trend is the concentration of investment in a small number of deals – 75% of funds invested went to just 10 companies and over 20% to just one company – Mimecast. This is being driven by active VCs, funded by LLPs, being encouraged to focus on a few larger deals in contrast to many of the new entrants are favouring the financing of smaller, less capital intensive, opportunities. It reflects the substantial underlying changes to the investor base in the UK and Ireland.
The volume of deals being completed is low against the levels of activity in H1 but when compared to average number of companies being funded over the last 12 quarters it is closer to the norm. At the end of Q2, Ascendant anticipated the final total investment figure for 2012 would be greater than £900m but probably not exceed £1bn. That still feels about right…
Looking more generally, we have summarized our analysis of the year in the attached PAGEONE report. This highlights a number of trends – including:
- In Q3, £183m was invested in 48 deals of over £0.5m by 75 investors;
- In the year so far, £778m (£657m) was invested in 172 (145) companies;
- The busiest investors were Scottish Enterprise, Accel, DFJ Esprit, Parkwalk, Angel CoFund, Arts Alliance, CT, IP Group and SEP;
- 67% of deals involved more than one investor;
- Private investors participated in 31% of deals, US investors in 17%, Euro investors in 10% and Corporate Investors in 17%;
- The biggest deals were Mimecast (£38m), Skydox (£20m), Oxis Energy (£15m), Sumup (£13m), Ubiquisys (£12m), Matches Fashion (£12m), Open Gamma (£10m), Nujira (£8m), Pyreos (£6m) and Aquamarine Power (£5m);
- In the Internet/Wireless Services sector, 19 companies received £93m – Mimecast (£38m), Skydox (£20m) and Matches Fashion (£12m) received the biggest VC cheques;
- 6 Cleantech companies raised £25m with the biggest deals being: Oxis Energy (£15m), Aquamarine (£5m) and Yasa Motors (£2.5m);
- 10 Software companies received £16m – Open Gamma (£10m), eeGeo (£3m), Navmii (£1m) being the largest deals;
- Otherwise the biggest deals were: Sumup (£13m), Nujira (£8m), Pyreos (£6m) and Phase Focus (£3.2m);
- The most active regions were London and The North which were responsible for 40% and 17% of deals respectively
- There wer NO transactions in the Midlands; and
- London’s share of the VC money was unusually high amounting to 52% of the funds invested in the UK and Ireland.