Scottish venture capital investment hits £181 million during first quarter

Venture capital investment in Scottish firms hit £181m in the first quarter of 2022, compared to £64m raised during the same period last year.

The latest KPMG Venture Pulse Survey showed that 41 deals were completed during the first three months of the year.

In the previous quarter, 31 deals worth £97.6m were recorded. Last year, a total of £626m of venture capital investment was raised by Scottish business.

The lion’s share of deals in the first quarter of 2022 were done with businesses based in Edinburgh (20), followed by Glasgow (11), Dundee (4) and Livingston (2).

Standout deals completed in the first quarter include the £94m raised by Edinburgh games developer Everywhere, £12.25m of fourth round funding for private bank Hampden & Co, and £5.07m raised by Glasgow-based Katrick Technologies from Greenbackers Investment Capital.

Whilst the bulk of venture capital investment continued to flow into London (£5.2bn), the rest of the UK also saw buoyant levels, with more than £1.7bn invested across 334 deals, according to the data compiled by PitchBook.

Venture capital investment in firms based outside of London has more than doubled since the pandemic – up 59% from the £3.3bn invested in 2019.

Amy Burnett, KPMG’s private enterprise senior manager in Scotland, said: “Despite concerns around the uncertainty in the economy, and with interest rates rising, Scotland continues to demonstrate resilience and adaptability in attracting investment, with fintech, B2B-focused services and healthtech remaining top areas.

“The power of our disruptive businesses to deliver impact on a global scale is more important than it’s ever been, and our innovators are a real success story – the collective focus on nurturing and supporting the Scottish scale-up ecosystem is great to see.”

Jonathan Boyers, UK head of corporate finance and vice chair at KPMG added: “Given some of the current geopolitical and macroeconomic uncertainties , we are seeing deal speed starting to slow as investors conduct more due diligence related to potential deals.

“We are already starting to see IPO levels decline, and we would expect activity to remain subdued in the second quarter of 2022 with the ongoing volatility in the capital markets.

“The closure of the IPO window could drive interest back to traditional mergers and acquisitions and the downward pressure on valuations could mean companies taking a wait-and-see approach with the hope that valuations bounce back.”

KPMG UK also announced it has signed an agreement to form a partnership with venture capital advisory firm Acceleris.

Through the joint venture, called KPMG Acceleris, the firms plan to deliver fundraising and advisory services to entrepreneurs in the UK and internationally, with a particular focus on businesses in technology, life sciences and sustainability-related sectors.

It will also give entrepreneurs access to an active pool of investors to support investments of £1m to more than £30m.

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