The UK ScaleUp Investment Mission
Venture Bulletin
Q3 Bulletin
UK is showing -44% fall year-on-year and -57% fall quarter-on-quarter in the access to Series A VC Funding in Q3.
Q3 Series A data
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The decline in access to VC funding continues, with Q3 2024 showing a record low - just 32 companies receiving Series A (£2-10m) VC funding…in the whole of the UK.
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A -43% decline from the same quarter last year and -c.50% from the previous quarter.
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A record low over the last 6 years.
The ‘Funding Ladder’ is broken
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Less than 1 in 10 seed-backed (note; not seed-stage) companies are able to access follow-on VC funding.
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Preliminary data for the 12 months ending 30/09/24 shows 2,179 companies accessed seed funding (<£2m)*, but a record low of 211 companies accessed Series A (£2-10m) VC funding. This is equivalent to 9.7%.
Quarterly decline
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Trailing 12 months to Sept-24. show consistently low numbers and every 2024 quarter in further quarter-on-quarter decline
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Culminating in a near-halving of the number of companies accessing Series A between Q2 and Q3.
Annual decline
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The comparison Year-on-Year quarterly data shows similar decline
Wider interpretation
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Approximately half a billion GBP less Series A capital is being deployed. than just 2 years ago.
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General trend (ignoring 21/22), is a broadly flat volume and value of UK Series A deals, c£1bn pa / sub 300 deals pa, but worryingly this is now trending down further still, closer to 200 deals pa.
Conclusions
(i) Seed drop-off
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UK entrepreneurs struggle to access first VC funding rounds
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The UK is witnessing incredibly low progression from the startup to scaleup phase, with lack of access to growth funding being cited as a core reason for this (Source: VenturePath ScaleUp Roundtables).
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Less than 1:10 seed-backed startups access VC funding
(ii) Series A-B decline
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UK Series A scaleup investment is declining steeply, with knock-on effects later in the investment cycle
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In 2023 less than 300 startups accessed venture capital funding in a Series A round (first institutional investment).
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At present rates, 2024 is expected to conclude with closer to 200 companies accessing Series A; around half of the number of companies (409) being VC funded at this stage in 2022.
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Series B funding for the period was around 140 companies.
(iii) Global competitiveness
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The UK is losing ground internationally, ranked 3rd best for supporting startups but only 13th for scaleups [OECD] - this ranking is before 2024’s dismal Series A and B statistics are taken into account.
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We risk losing our lead in startup support, and falling further behind in delivering scaleup support.
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This lack of pipeline will stifle the UK’s ambition to be globally competitive.
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The UK needs to better support high potential future scaleups and address the lack of access to growth funding to drastically increase the progression of startups to the scaleup phase.
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This will create more venture-backed UK successes.
Footnotes
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The UK ScaleUp Investment Mission was created in readiness for the new Government, and is supported by a consortium of 100+ UK investment ecosystem organisations and leaders; scaleup founders and funders representing £7bn of venture capital and the major banks.
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High profile private sector organisations and senior supporters are convening to address the scaleup funding gap, through planned interventions to improve UK wide understanding of, and access to, venture capital.
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Through Ministerial roundtables and meetings, Government and the British Business Bank have been invited to collaborate to play an active role on this mission; to overcome the venture funding accessibility barrier and create a more equitable venture landscape for the founders of today and tomorrow and help create more venture backed UK successes.
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The UK ScaleUp Mission is coordinated by VenturePath - The UK’s Scaleup Investment Community, and supported by Beauhurst, its data partner.
Graphs
Q3 investment data for The UK ScaleUp Investment Mission courtesy of Beauhurst.
