Equity Investment Market Update

H1 2023

1,094

deals completed

-12%

from H2 2022

-31.2%

from H1 2022

£5.94b

invested

-13.9%

from H2 2022

-56.4%

from H1 2022

Data for this report was finalised on 28 July 2023.
To be included in our analysis, an investment must be:

Dated between 1 January 2013 to 30 June 2023
Be publicly announced
Some form of equity investment
Secured by a non-listed UK company

Headline funding figures

H1 2023 saw 1,094 equity fundraisings announced by UK private companies—down 12% from the previous half (1,243). Deal value continues to decline, with investors deploying just £5.94b during the first six months of the year. This marks a 13.9% decrease since H2 2022 (£6.9b) and a massive 56.4% fall since H1 2021 (£13.5b).

Following the significant dip we witnessed in Q1 2023—where 542 deals were closed, raising a total of £2.38b— Q2 2023 has experienced heightened activity. This quarter, a total of 556 deals were announced, raising £3.58b, up 50.4% from Q1 of this year.

Against a background of macroeconomic instability and bank rates sitting at their highest level since 2008, the figures for this half look less bleak. In fact, the rise in deals and investments secured this quarter gives cause for hope.

Stages of evolution

Following the downward trend from Q1 2023, this half saw a decline across every stage of evolution in both the number of deals and the amount invested from H1 2022. However, with H1 2022 raising record levels of equity across every stage of evolution, this fall comes as less of a surprise.

The Growth stage saw the largest fall in investment from H1 2022, with a decline of 77%, from £7.32b to £1.68b. This also marks the lowest amount secured in a half by Growth stage companies since 2018.

Meanwhile, the Seed stage saw the greatest fall in the number of deals closed (32.2%) from 575 to 390. The largest Seed stage round this half was secured by Little Houses Group who took £71.0m back in January to fund the expansion of the business, including opening new venues. This is also the largest first-time round we have seen this half.

Regional trends

The positive trend of improving regional disparities from the last quarter continues. In this half, the proportion of deals going into London-based companies has fallen by 14.4% from H1 2022, making room for other regions to benefit from an increased share of equity investment.

Behind London in the rankings are the South East and Scotland (with 11.4%% and 8% of deals, respectively), while Northern Ireland secured the fewest (1.19%). The South East was the only region to see any sizeable shifts in funding from H1 2022, increasing its share of equity by 3.32%.

Scotland’s biggest equity deal this half —worth £20.0m—was secured by Lothian Broadband which develops existing wireless broadband networks in East Lothian. Meanwhile, Material Evolution, which develops technology to enhance construction materials, secured the largest deal in Northern Ireland this half. The company raised £15.0m to scale production facilities, develop new products, and start the process of licensing the company’s technology across the UK and internationally.

First-time fundraisings

In line with a declining number of Seed stage rounds, first-time rounds have also fallen from H1 2022. The volume of deals has declined by 26.1%—from 394 in H1 2022 to 291 this half. Meanwhile, the amount invested into first-time rounds has fallen more significantly (45.6%) from £1.11b to £604m. On average, this half, first-time fundraising received £2.61m. This marks the second year of decline in both the number of deals and the amount invested into first-time rounds since 2021.

Deal sizes

As expected, the number of megadeals (rounds worth £50m to £100m) and gigadeals (rounds worth more than £100m) has decreased. This half a total of 11 megadeals were closed—down 67% from this time last year. Meanwhile, just four gigadeals were closed this half, down 86% from H1 2022. This marks the lowest number of gigadeals closed since 2018.

Once again, the figures seem much more promising in comparison to Q1 of this year. From Q1 to Q2 this year, megadeals have increased by 20% whilst gigadeals have increased by 200%.

The four gigadeals of this half were secured by Howden Group Holdings, Raylo, Quantexa and Ascend Gene & Cell Therapies.

Investor types

Nearly every major investor type decreased their fundraising activity in H1 2023. Private equity and venture capital firms remain the most active investors in the UK, participating in 40.3% of all announced deals (441). However, deal volume has decreased from Q1 2023, with private equity and venture capital funds participating in 16.6% fewer deals from last quarter.

With a 25.3% decline in deal numbers, crowdfunding platforms saw the smallest fall from H1 2022. Moreover, crowdfunding deals have increased considerably (+56.1%) from last quarter. As an integral part of the early-stage investment landscape, promising crowdfunding numbers suggest cautious optimism for an increase in first-time rounds and Seed stage rounds in the next few quarters.

Meanwhile, deals made by corporate funds fell the most from this time last year (-78.2%). Deals made by angel networks and universities have also fallen greatly (by 43.6% and 42.9% respectively).

Sectors

For the second quarter, the artificial intelligence sector has held onto the number one spot within tech verticals with a total of 149 announced deals this half. Also holding onto its position from last quarter is cleantech, which secured 112 deals this half, making it the second most popular sector with investors.

This comes as a shift in investor interest from H1 2022 where fintech held the top spot. Indeed, fintech deals are down 43% from this time last year.

Following a period of rapid growth, likely brought on by the pandemic, the drop-off in investment within the life sciences sector continues. The sector secured just 59 deals this half, down 20.3% from H1 2022.

Meanwhile, the blockchain sector is continuing to attract investor attention. In Q1, we reported blockchain deals were up by 43.5% from Q4 2022. This half, we have seen the sector increase its deal numbers by 13.8% from H1 2022. The complementary technologies used in blockchain and artificial intelligence have us excited about the future potential and applications of these sectors.

Biggest deals of H1 2023

1. Howden Group Holdings

Amount: £1.17b *
Deal date: 24/04/2023
Location: London
Sector: Insurance

Howden Group Holdings operates a number of businesses which provide international insurance brokerage and underwriting services.

*equity and loan round

2. Raylo

Amount: £110m *
Deal date: 30/01/2023
Location: London
Sector: Artificial intelligence

Raylo allows consumers to lease a range of new and refurbished technology products on a flexible, subscription basis.

*equity and loan round

3. Ascend Gene and Cell Therapies

Amount: £105m
Deal date: 09/05/2023
Location: London
Sector: Genomics

Ascend Gene & Cell Therapies conducts biotechnology research with a focus on cell and gene therapy manufacturing.

4. Quantexa

Amount: £104m
Deal date: 03/04/2023
Location: London
Sector: Artificial intelligence

Quantexa develops a decision intelligence platform using big data and artificial intelligence.

5. Nothing

Amount: £75.9m
Deal date: 28/06/2023
Location: London
Sector: Electronics hardware

Nothing develops smart consumer electronic products, such as mobile phones and earphones.

6. Smart Pension

Amount: £75.8m
Deal date: 15/05/2023
Location: London
Sector: Fintech

Smart Pension develops a retirement planning software platform to allow organisations to enrol employees and manage pension schemes.

7. Impact Oil & Gas

Amount: £75.6m
Deal date: 28/04/2023
Location: London
Sector: Oil and Gas

Impact Oil & Gas explores sedimentary basins for oil and gas in offshore Africa.

8. Zopa

Amount: £75.0m
Deal date: 02/02/2023
Location: London
Sector: Challenger Bank

Zopa operates an online bank which offers services such as personal loans, credit cards, and car financing.

9. Infogrid

Amount: £72.4m *
Deal date: 11/04/2023
Location: West Berkshire
Sector: Internet of Things

Infogrid develops a buildings intelligence platform that analyses Internet of Things technology, with the aim of making buildings more efficient and sustainable.

*equity and loan round

10. Synthesia

Amount: £71.4m
Deal date: 13/06/2023
Location: London
Sector: Artificial intelligence

Synthesia develops AI technology designed to accurately model the intricate details of the human face in motion for the purposes of enhancing virtual storytelling.

About the authors

Farzana Haque

Farzana is responsible for Beauhurst’s content creation. She produces expert analysis for our data-driven articles and reports. Prior to joining Beauhurst, Farzana read Philosophy and Theology at the University of Cambridge.

Ben Hyde

Ben is a Graphic Designer, creating everything from branding materials to visual content for Beauhurst’s blog and long-form reports. He has a keen eye for detail and a passion for good design. Ben holds a BA in Graphic Design from the University of Cumbria.