Tim Kay
Director
KPMG Private Enterprise

Q1 2020: The momentum continues

Scaleups continued to see strong VC investment including the $100m+ funding rounds by LumiraDx, GraphCore, and Starling Bank. Corporate VC affiliated investment rose 69% to £1.1bn in the first three months of 2020 from £650m in Q4’19.

VC investment in UK scaleups continued to grow during the first quarter of 2020, according to the Global Venture Pulse Survey by KPMG Private Enterprise, with data compiled by PitchBook.

“The first quarter saw VC investors continue to recognise the strength of the UK’s innovative and expanding scaleup ecosystem, as well as its strong base of maturing scaleups, which is particularly evident in areas like fintech and biotech as we navigate the current situation”.

Tim Kay, Director, KPMG Private Enterprise

VC investment in Europe rises, driven by strong geographic diversity

While the number of VC deals in Europe dropped from 1,262 in Q4’19 to 923 in Q1’20, VC investment in the region rose from $7.9bn to $8.8bn. Europe’s strength continues to be driven by the growing geographic diversity of investment.

VC investment in the UK surged to $3.2bn in Q1’20, Germany-based VC investment increased nominally to $1.37bn, while France had the second strongest quarter of VC investment on record with $1.36bn.

UK-based Revolut ($500m) was largest of the top five deals in Q1’20 across the region, along with Germany’s Lilium ($240m), Israel’s AppsFlyer ($210m), Sweden’s Klarna ($200m), and France-based Colonies ($197m).

COVID-19 impact and the way ahead

As the COVID-19 pandemic continues to affect sectors across the board, corporate VC investors could be cautious with their cash reserves, affecting investment rounds in most new scaleups. However, digital services, edtech, health and biotech companies should remain attractive even during the crisis given their applicability and long-term potential.

 

“While investments will continue to be made, we can expect a significant slowdown in volume and a potential resetting of valuations. On the other hand, investors may want to re-balance portfolios with companies that they expect to thrive in a recovering post COVID-19 world.”

Tim Kay, Director, KPMG Private Enterprise

Top UK Deals 

Revolut - $500m

Immunocore - $168m

Synk - $150m

Graphcore - $128.05m

CurrencyCloud - $121.77m

Arrival - $111.38m

Rapyd - $104m

Tokamak Energy - $87.51m

Thought Machine - $83m

About Venture Pulse

KPMG Enterprise’s Global Network for Innovative Startups launched the Q4'19 edition of the Venture Pulse Report. The report analyses the latest global trends in venture capital investment data and provides insights from both a global and regional perspective. This edition of the quarterly series provides in-depth analysis on venture capital investments across North America, EMA and ASPAC and will cover a range of issues such as financing and deal sizes, unicorns, industry highlights and corporate investment.

Please note, these figures are accurate as of 21 April 2020. 

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