Scale-ups attract record levels of venture capital
Big attraction: Stewart Whiting and Chris McCann of Current Health
Foreign providers of venture capital continue to invest record sums into Scottish scale-ups with more than £322.3 million raised in the first half of 2021.
A strong COVID-19 vaccination programme and greater business confidence in the post-Brexit environment resulted in 60 deals being completed in Q2 2021, three times the previous quarter (20), according to Venture Pulse, a quarterly report published by KPMG Private Enterprise.
Providers of consumer products and services, as well as healthcare businesses attracted the largest deals in Q2, including £36.17 million raised by Glasgow-based culinary tech business, Enough, in a deal led by Nutreco and Olympic Investments.
Edinburgh-based Current Health, a healthcare tech firm, also attracted more than £31.42 million in a deal led by Northpond Ventures.
Later stage deals continued to attract the most investment in Scotland, but interest in earlier stage deals grew with more businesses beginning to raise Series A and smaller rounds.
Amy Burnett, senior manager, KPMG Private Enterprise, said: “Despite the challenges of the pandemic, certain sectors in Scotland, such as healthcare technology, have flourished.
“Scotland has maintained its reputation as an incubator of innovation with a vibrant technology scene, highly skilled workforce, and supportive business environment, and is increasingly attractive to investors.
Amy Burnett: ‘vibrant technology scene’
“A mix of homegrown talent and overseas firms putting roots down in Scotland permanently is driving investment.
“It’s important we continue to support these firms, with one eye on sectors that appeal to VCs and are helping increase investment during our recovery from Covid-19.”
The rest of the UK also continued to deploy record amounts of money into UK scaleups with nearly £17bn raised in the first half of 2021.
More than £6.5bn was invested into fast growth UK businesses in Q2 21, with 708 deals being completed, up 7% on the previous quarter.
Fintech and healthcare tech businesses attracted the largest deals in Q2 21, including $500m (£360m) raised by B2B payments firm SaltPay, $330m+ (£240m) raised over two rounds by AI-powered drug discovery company Exscientia, $453m (£322m) raised by digital bank Starling Bank, and $130m (£94m) raised by digital health company Huma.
Bina Mehta, chairman of KPMG UK and head of the firm’s UK emerging giants centre of excellence said: “The UK has demonstrated resilience and adaptability in attracting overseas investment in a post-Covid, post-Brexit era, which is likely due in part to the maturity of our scaleup ecosystem.
“The power of our disruptive businesses to deliver impact on a global scale is more important than it’s ever been, and our UK innovators are a real success story.
“VC investors, particularly from Asia and the US, continue to be attracted by the strength of our businesses and diversity of our UK scaleup ecosystems across the UK.”