Q4 2022 Venture Pulse Report - UK

Value of investment into UK businesses falls as global economic challenges force VC funds to proceed with caution

VC investment levels into UK businesses fell by almost a quarter (23 percent) in 2022 as the global economic turmoil forced investors to take a more cautious approach.

Nicole Lowe

Head of Emerging Giants and KPMG Access in the UK

KPMG in the UK

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The first half of 2022 continued to see high levels of investment, with more than £14.7 ($18) billion raised. However, levels started to tail off in the latter half of the year ending with £22.7 ($27.7) billion being raised by UK businesses in 2022, the second highest level since the report began. Deal volume also fell, with the number of deals completed in 2022 (3213) down by 16 percent on the 3830 deals completed in 2021.

London continued to attract the lions share of VC investment flowing into the UK last year, accounting for two-thirds of all the deals completed in the UK with over £16.4 ($20) billion raised across 1770 deals, whilst deal value into the UK regions fell by £3 ($3.7) billion year on year, with £6.2 ($7.6) billion raised over 1443 deals in 2022.

The UK saw several pockets of strong activity, including sustainability, gaming, and health and biotech.

Despite the challenges in 2022, it was still a very good performance by our UK innovators as the past three years have seen healthy tallies for capital commitments to venture coffers. With over £22 ($27) billion committed, fund managers gathered plenty of capital commitments to fuel dealmaking in the years to come

Warren Middleton

Lead Partner

Emerging Giants Centre of Excellence KPMG in the UK

UK trends to look out for in 2023

ESG businesses could be particularly compelling; IPOs might not be seen in the space right away however companies could start the work required to become IPO ready.
VC market globally is expected to remain challenged, with consumer-focused businesses expected to see the most strain.
As companies run out of cash, increasing number of down rounds and an increase in M&A activity is expected. Globally, several unicorn deaths over the next few quarters are projected.
The broader energy sector will likely remain very hot, with investors continuing to make big bets on alternative energy technologies, electric and hydrogen-powered vehicles, and battery storage.
On a global basis, cybersecurity, B2B solutions will likely remain very attractive areas of VC investment in Q1’23.

For more UK and global insight read the Global Venture Pulse Q4 2022 report opens in a new tab