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Developments of the UK Venture Capital Scene – August 2014

by Matthew Morris

  • 04 Aug 2014
  • PE
  • VC

In recent news, £50mn worth of government funding to turn London’s Old Street roundabout into ‘Silicon Roundabout’ has been pulled, even before the project got off the ground. The idea was to give the UK’s ‘Tech City’ a hub dedicated to entrepreneurs and start-ups focused on the latest technologies and cutting-edge facilities. Instead, No. 10 Downing Street has opened its doors to accommodate pitches from aspiring entrepreneurs in front of a host of venture capitalists and angel investors at its ‘Pitch10’ event. With a stall in proceedings for the infrastructure development of the UK’s closest answer to California’s Silicon Valley, this blog will take a look at the venture fundraising aimed at the UK and Europe in general, to see how attractive the start-up scene is.  

Generally, venture capital fundraising has remained below the levels seen pre-financial crisis in 2008, and is far off reaching the heights seen at the start of the millennium. 2013 saw a total of $30bn in aggregate capital raised in global venture funding, significantly lower than both the $51bn garnered in 2008 and the $76bn collected in 2000. European venture capital fundraising remains low as well, with 2013 showing slightly more than €3bn collected, compared to past peaks of €7bn in 2008 and €9bn in 2000. Currently, there are 573 venture capital funds in market that are aiming to accumulate $61bn in total commitments. 

According to Preqin’s Funds in Market online service, there are presently 11 venture capital funds in market targeting the UK as part of an exclusive or wider geographical focus, hoping to amass an aggregate total of €987mn. This compares to a total of 80 venture capital funds targeting West Europe either exclusively or as a part of wider focus, currently raising and looking to collect an aggregate €6bn. Funds focusing on Germany in particular are leading the way, potentially having access to over €1bn of this. The UK therefore does not currently stand out as an overwhelming favourite in attracting venture capital funding in Europe, and remains well behind the US, who will be the recipient of 49% of the $61bn venture capital funds in market. 

Since 2008, over €3bn has been raised by venture capital funds looking to invest mainly in the UK, with €1bn secured in 2011 alone. The UK has seen venture capital investments into the country grow since 2009, with the number of venture capital deals rising from 273 in 2009 to almost 500 last year. This shows that the country is increasing in popularity for venture capital investors. 

Despite some clear vibrancy on the British venture capital scene, the UK still trails far behind the much more developed US market and faces stiff competition closer to home in the shape of Germany in attracting venture investors. That said, with over €3bn secured since 2008, and nearly €1bn in funds to possibly follow, there is plenty of capital obtainable for entrepreneurs in order to accelerate the growth of the Silicon Roundabout and the UK venture capital arena as a whole. 

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