Seed-stage deal numbers bounce back

The pandemic sparked a wave of entrepreneurial activity across the UK, creating one of the most promising climates for rapid growth early-stage companies the UK had ever seen, as entrepreneurs worked to adapt to circumstances and create a pipeline of innovative businesses.

But despite that entrepreneurial enthusiasm, the UK saw a decline in investment activity at the seed stage since 2018, particularly when it came to initial deals.

Causes of this decline can come down partly to the pandemic and the lockdowns that came with it, but is also likely a product to changes made to the Seed Enterprise Investment Scheme (SEIS) in 2018.

The most notable of which being the fact that companies are no longer able to make speculative applications to be pre-approved under the scheme, meaning that companies are not able to offer SEIS approval as a way to entice investors.

However, early-stage deals have shown an impressive recovery in H1 of this year, following the huge decline in the number of Seed rounds in H2 2021, as the number of deals are up 24% from the previous half and is rising to a record high of 575.

At the same time, the number of rounds being announced has also risen at the Venture stage, reaching a record 620 deals, marking a 6% increase from the previous half, and has started to plateau at the Established stage, coming in at a 1% increase from the previous half.

Meanwhile, Growth-stage deals have experienced a minor drop off of 5% from the previous half, but do still come in at an overall increase compared to H1 of 2021.

Record-breaking amounts were invested at the Venture stage, producing £3.81 billion, the Growth stage, at £7.32 billion and at the Established stage, which yielded £2.67 billion.

On the other hand, Seed-stage companies have raised £1.09 billion, figures just under the peak of £1.14 billion which H2 of 2020 saw, but nevertheless, at an increase from the previous half.

Generally, when it comes to the amount of funding being secured across this first half, investment has increased through every stage of evolution in comparison to H2 of 2021, a promising fact for investment going forward.

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