Northern Venture Capital Investment Outpaces National Growth

Northern businesses received £343.5million in venture capital investment in 2019 across 157 deals, according to the latest Venture Pulse report published by KPMG.

The report highlights a 37 per cent year-on-year increase in venture capital funding for the region’s businesses, up from £249.5million in 2018. The surge in investment means that growth in the North’s VC market outperformed the national rate (22 per cent), with investment in innovative UK scaleups hitting more than £9billion across the UK.

The new figures include a particularly active final quarter for businesses in the North West where £1.1million-worth of venture capital was disclosed across five deals, including seed and early stage investments for BlackDice, Shopblocks and Football4Football.

Elsewhere, investors were much more lively in Yorkshire and the North East where investment reached £14.5million across 15 disclosed deals. Notable deals included Dell Technologies Capital’s backing of Newcastle firm IoTech Systems and a £3million injection for Sheffield education platform Tutorful.

Commenting on the findings, Lizzie Smith of KPMG Private Enterprise, who works with fast growth businesses in the North, said: “These figures represent a strong year for the North’s start- and scale-ups despite the political uncertainties that dominated the business agenda in 2019. The impact of that was clearly felt in the latter half of the year as both Brexit and general election deadlines neared. However, it’s clear looking at the wider picture that investors remained confident in closing deals despite political uncertainty.

“Anecdotally, we’ve already noticed an uptick in activity in 2020 and would expect to see further progress as investor confidence returns and more businesses come to market in search of vital growth capital.”

Growth across the UK

The data, compiled by PitchBook, recorded 1,648 completed UK VC investments during 2019, with nearly £2billion invested in scaleup businesses in the last three months of 2019, slightly down on the highs seen over the summer.

VC investments in later stage businesses, particularly in the financial services, biotech and healthcare sectors, drove the vast majority of deals completed.

Lizzie Smith continued: “Our scaleup businesses have had a fantastic year and continue to fly the flag for British innovation, attracting investment from all over the world as VC investors focus on later stage companies in sectors in which the UK is seen as world-leading.

“There was, however, a continued decline in early and seed stage deals. Access to funding is a foundation for growth, and domestic innovation could be impacted if our next wave of entrepreneurs fail to attract the capital they need to grow now. At best, it will slow their growth; at worst, it will make them uncompetitive on a global stage, leading them to relocate or become unsustainable.”

Record number of unicorns born in 2019


2019 saw a record number of VC-backed unicorns, (companies valued at $1 billion), with 110 new unicorns created globally, including the UK’s Babylon Health and Cambridge-based CMR Surgical.

Lizzie Smith concluded: “As the UK enters negotiations about its future relationship with the EU, disruptive businesses in the UK will be watching closely to ensure the essential flow of talent to the UK continues. Whatever outcome Brexit may ultimately have, the fact that negotiations are now moving may have assuaged some investor concerns in terms of their willingness to participate in deals, and we can expect to see large volumes of investment continue to find its way to our innovative ecosystems across the UK.”