There are currently 17 venture capital funds in market that include the UK as part of a wider geographic focus. Together they are seeking an aggregate $2.1bn. The largest of these funds is TPG Biotechnology Partners IV, which is targeting $350mn and will invest across a variety of healthcare and medical industries. While TPG is headquartered in the US, 65% of UK-focused funds currently in market are being raised by managers based in the UK.
The UK venture capital market has been attracting an increasing amount of capital, echoing trends seen elsewhere in the world such as in Silicon Valley. Preqin’s Funds in Market database shows that venture capital funds with an investment focus on the UK accumulated $1.5bn in 2014, the highest amount since 2011, when $1.6bn was raised.
The most up-to-date final-year figures, as seen in the chart above, indicate a revival in the UK venture capital market in recent times – rising from a low of only five venture capital funds that included the UK in their geographic focus securing an aggregate $311mn in 2012 – pushing back towards the heights seen at the start of the millennium. However, this trend has been inconsistent: in 2013, $425mn was raised by seven vehicles that included the UK as part of a wider geographic focus, nearly $1.1bn less than in the following year and half the number of funds.
Such a significant increase could indicate that more fund managers are recognising the attractive investment opportunities to be found in the UK. This may be because of attempts to provide greater support for start-ups and the particular buzz of activity in the London ‘Silicon Roundabout’ hub. However, it remains to be seen if this is the beginning of a new trend or the latest in a series of fluctuations. It will be interesting to see if 2015 figures manage to outstrip those of 2014. If this positive trend continues, UK-based start-ups and investors capitalizing on them will reap the rewards.