Government support brings scale-up investment to record high
The government’s Future Fund scheme helped British scale-ups secure a record number of investments, according to new research.
There were 2,928 announced deals for high-growth companies last year according to Beauhurst research.
While deal volume grew 48 per cent year-on-year the total investment volume dropped eight per cent to £10.8bn.
Venture capital activity remained fairly resilient although first-time fundraising fell 15 per cent year-on-year as funds turned to their portfolios at the start of the pandemic, which meant second time deals inched five per cent higher.
London saw first time funding rounds decline just eight per cent over the year.
The Government became a significant contributor through the Future Fund scheme which was launched in May to provide support to startups through government loans.
Without convertible loan raises via the Future Fund, British scale-ups would have received £9.8bn via 1,957 deals, a 16 per cent and one per cent fall respectively.
Aside from the government’s interventions, individual angel investors saw the most year-on-year growth with 324 deals, up from 272 in 2019.
Angel investor confidence has remained resilient, a surprising finding from Beauhurst’s research given this type of funding is typically the first to fall in an economic crisis.
In terms of sectors, technology firms unsurprisingly remained popular, with fintech, blockchain and digital security companies all securing record levels of investment.
The number of fintech deals totalled 221 in 2020, compared to 210 in 2019, while the number of investments in blockchain companies rose to 44 in 2020 from 40 in 2019.