Uh-oh; UK Startup Investment Is At Lowest Ebb For Five Years!

Is it Brexit? Have we run out of things to disrupt? Has the number of London based startup hipsters reached critical mass? Will we ever see so many beards and knitted jumpers in one coffee shop again?

Possibly not, say deal-data-crunchers Beauhurst, who released the latest version of The Deal, an analysis of “all equity investment into the UK’s high-growth businesses throughout 2016.

Annual deal numbers have fallen for the first time since their records began, Beauhurst say, by 18%. That’s “just” 1,203 deals. Total investment was also down, by 12%, to £3.6bn, and even crowdfunding sites, the great white hope of “wantrepreneurs” everywhere, have little to celebrate.

Deals were down by 14%, with just 301 completed last year.

Before we start blaming it all on Brexit, January aside, the first half of 2016 was not an inspiring one, and in fact August saw a spike in value of investments made; nearly £400m, from just 82 deals, the second lowest number of monthly deals in 2016.

Now, this could be significant and indicative of a trend that London, the UK and especially the government have been trying to kick-start ever since Sherry Coutu CBE released her “scale-up” report back in 2014.

Fewer deals, but larger investment sizes indicates that companies that do get funded will be in a better position to grow.

Take Deliveroo for example. The food delivery start-up with the natty raintops won £210m of investment – the largest of the year in the UK.

The next largest was Skyscanner’s £128m raise – the company went on to exit to Chinese travel firm C-Trip for $1.7bn dollars.

The average deal size in 2016 was, in fact, up on the previous year – £3.7m.

So, there may be fewer entrepreneurial start-up founders winning funding for their early stage startups, but there is greater investment in the proven success stories.

It’s time to get out of the disruptive sandpit and start challenging the big-boys, says the government – scaling up can boost the economy to the tune of 238,000 new jobs and add £38 billion to GVA within 3 years.

And that, Hipsters, Hackers and Hustlers, is a big deal. So, keep on hustlin’ peeps, and start thinking bigger ; )

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