VC Investors hold their nerve on UK as Brexit looms

Credit: Linda Bestwick

The UK bucked expectations in 2018, continuing to attract significant levels of Venture Capital (VC) funding despite ongoing uncertainty around Brexit, according to Venture Pulse Q4 2018, a quarterly report on global trends published today by KPMG Enterprise.

Whilst VC investment in Europe reached $24.4 billion in 2018, surpassing 2017’s record numbers, the figures, released today, found that $7.7 billion was invested in UK startups over the course of 2018. This was more than 1.5 times the level invested in fast growth businesses in Germany, and 2.6 times the levels of investment seen by the startup ecosystem in France.

The robustness of the UK’s innovation ecosystem remained apparent in the last quarter of 2018, where almost $2 billion was invested in UK based startup businesses, with UK-based deals accounting for four of Europe’s largest 10 deals, including the region’s largest two deals — a $200 million raised by Graphcore and a $156 million raise by property sales company Nested.

Commenting on the findings Patrick Imbach, Head of KPMG’s innovative startup practice said: “For years now, the true implications of Brexit have remained open questions however, the venture ecosystem would appear to have been unaffected so far. Global VC investors continue to be attracted to good quality UK businesses, and are particularly focused on larger and later stage deals.

“Like the rest of Europe, the UK has seen a decline in the number of completed financings towards the end of 2018, indicating that as the deadline approaches, investors are starting to grow more cautious, waiting to see whether a plan materialises. Concern around competing for talent will dominate conversations being had by entrepreneurs across the UK and could impact the growth of innovation and our startup sector as we face what is likely to be a challenging year ahead.“