Despite a decline in deal numbers, UK venture capital shows increased deal values and valuations, indicating a recovery.
- The PitchBook report highlights easing inflation and interest rates as critical factors aiding this recovery.
- Significant funding rounds include Flo’s £156 million, Amber Therapeutic’s £78 million, and Dexory’s £60 million.
- UK valuations are pacing above last year’s figures at pre-seed and venture growth stages, but remain flat or down at seed and early stages.
- Venture capital valuations in the UK, especially at later stages, show resilience despite slight lags behind European averages.
Amid fluctuating market conditions, the UK venture capital landscape is exhibiting signs of recovery. According to a report by PitchBook, while the number of venture capital deals saw a decline, the size of these deals and associated valuations have increased significantly. This trend suggests a robust market improvement driven by a favourable investment climate as interest and inflation rates ease.
Central banks have played a pivotal role by adjusting monetary policies to optimise market conditions. With central banks in the UK and across Europe successfully managing inflation and interest rates, the investment environment has improved markedly. This positive shift has allowed for larger deal sizes and elevated valuations in venture capital rounds.
Major funding rounds in the third quarter of 2024 highlight the recovery. Notably, Flo, a women’s health application, secured £156 million in a Series C funding round. Amber Therapeutic, a med-tech company, raised £78 million in its Series A, while Dexory, specialising in robotic warehouse technology, received £60 million in Series B funding. These sizeable contributions exemplify the strengthening market.
Pre-seed and venture growth stage valuations in the UK have shown promising growth compared to last year. Pre-seed valuations averaged £3.2 million, marking a 31% increase from the previous year. Meanwhile, venture growth valuations reached £16.8 million, up by approximately 5% from 2023 figures. These numbers indicate a positive trend, although early-stage valuations remain under pressure.
UK valuations, despite trailing slightly behind European averages, remain robust. In the third quarter, median seed valuations in Europe were £4.5 million compared to £4 million in the UK. At the venture growth stage, Europe’s median was £20.8 million, whereas the UK was at £16.8 million. According to PitchBook, the UK’s dynamic activity levels influence these metrics, reflecting long-term trends in European VC valuations.
The UK venture capital market is evidently on a path to recovery, underscoring its resilience against economic challenges.
