Despite predictions of gloom, equity investments in the first half of 2021 have rebounded in a big way, according to latest Beauhurst figures.
Most pleasing was the dramatic increase in seed or first-time rounds, and despite FinTech’s continued dominance, other sectors are also flourishing, as indicated in Beauhurst’s, “Equity Investment Market Update H1 2021”.
Across the UK a total of £10.7b was invested into 1,296 deals in the 6-month period to the end of June – an increase in investment of 121% and a 24% uplift in the number of completed deals, from the previous half-year (H2 2020).
If the trend continues, then we could see in excess of £20b invested into the UK’s private companies in 2021.
Refreshingly there was a significant increase in the number of first-time rounds in Q1 2021, which was welcome news to the start-up sector.
A total of 218 first-time rounds were completed in Q1 2021, representing a 50% increase from the previous quarter; though this number was possibly skewed as a consequence of investor uncertainty during the lockdown.
The second quarter hosted 166 first-time deals, and the total number of 384 seed rounds for the half year was the highest number since 2014.
Interestingly, and in line with our own views, Beauhurst is expecting to see another increase in the number of first-time or seed raises in the months ahead.
Across all investment stages, deal numbers were strong during H1 2021, with a record number of rounds for seed (501), venture (573) and established-stage deals (74), representing increases from the previous half-year of 18%, 4% and 57%, respectively.
And while growth-stage deals remained stable (148 v 147 in H2 2020), a staggering £5.4b was raised in these growth rounds, representing a 148% on the previous half-year.
Meanwhile, the value of investments at the seed-stage rose 35% to £697m); 43% at venture (to £2.71b); and 77% at the established stage (to £1.77b).
In terms of sectors, life sciences companies continued to attract huge interest, with 88 deals worth £1.42b closing in H1 2021. This was 2.4 times the amount invested in H2 2020.
Despite this increased interest in life sciences, which looks set to surge courtesy of the Government’s recent promise to “make the UK the most attractive location in Europe to start and grow a life sciences business,” FinTech and AI continued to dominate.
In total, 157 FinTech deals worth £3.28b and 128 AI deals worth £1.40b were closed in H1 2021.
It has been extremely pleasing to see the UK’s investment ecosystem move ahead post-pandemic in such a bullish way.
The bounce-back highlights the strength of the sector in the UK and should demonstrate to our international friends that the UK remains an outstanding destination to set up and raise capital for innovative businesses.