Venture capital (VC) investment in the UK fell to its lowest level since before the pandemic in the first quarter of the year, according to new data.
UK companies received £2.9bn in the first three months of the year, a relatively paltry figure compared to the heights of the last two years, according to research from professional services firm KPMG.
In the first quarter of 2021, VC investment in the UK reached £8.2bn, while in 2022 it got as high as £12.3bn. Economic pressures that kicked off partway through last year have brought down the VC market, however.
While the Covid-19 pandemic brought on many hardships, the low-interest rates during the period generated record levels of startup investment both globally and in the UK.
Some of the highest-profile VC rounds in the past two years include Revolut’s $800m Series E, Deliveroo’s $180m Series H, and the $600m investment into Octopus Energy, among others.
For Warren Middleton, UK chief of KPMG’s Emerging Giants programme, the slowdown was inevitable, as the dizzying investment level of the pandemic years was an “outlier”.
“What we are starting to see now is VC investment starting to come back to more normal levels, albeit compounded by a challenging economic environment,” Middleton said.
“The dynamic of the two factors together is making the disparity even bigger, but investor sentiment in the UK is starting to turn slightly with some cautious positivity that the worst of the market turbulence might be over.”
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