2021 was an exceptional year for the UK growth capital market, and while Q1 2022 got this year off to a flying start, the market certainly contracted in Q2. Moore Kingston Smith research shows that 345 UK businesses raised a total of £1.524 billion in Q2 2022, with an average deal size of £4.42 million.
This represents a 17% decrease in the number of deals completing and a 25% decrease in the overall amount of growth capital raised this quarter compared to Q1.
John Cowie, Head of Growth Capital at Moore Kingston Smith, reflects:
“It would appear that institutions are beginning to take a more guarded approach to investing due to various macroeconomic and geopolitical concerns, but we mustn’t forget how high the bar was set in 2021.
It feels like there may be further contraction in the number of deals and the amount invested in the latter part of 2022 as investors tighten their purse strings, but they still have plenty of capital to deploy for the right opportunity.
We’ll be watching the data with interest.”
Technology continues to be the top sector of choice for investors, accounting for 44% transactions both by volume and by value this quarter.
Notable deals in the tech space in Q2 included the £15 million investment by Maven in ProofID, a specialist provider of identity and access management services, and the announcement by London-based SLAMcore that it had raised $16 million in Series A capital to deliver low-cost spatial understanding technology to robots, autonomous machines, consumer electronics products and the metaverse.
It is clear that the market is still very active, with acquirers being a lot more strategic about their potential investments.
Paul Winterflood, Corporate Finance Partner at Moore Kingston Smith, comments:
“We are still positive about the outlook for the months ahead. Even if there is a period of economic uncertainty, the era of technological transformation will continue to drive transactions with high-performing and differentiated businesses, particularly tech-enabled ones, attracting the attention of investors.”
Source: Moore Kingston Smith