The venture capital landscape in the UK shows signs of recovery as valuations and deal sizes increase, while the number of deals declines.
- New data from PitchBook reveals a promising recovery in the UK venture market, with central banks cutting interest rates.
- The report indicates that valuations at pre-seed and venture growth stages are rising, although early-stage figures have fallen.
- UK median valuations trail behind Europe, with significant variations in deal sizes and valuations impacting median figures.
- High-profile funding rounds like Flo’s £156m Series C highlight increased deal sizes in 2024’s third quarter.
The latest data from PitchBook suggests that the UK venture market is regaining momentum, marked by rising valuations and larger funding rounds. While there has been a decline in the number of deals, the overall value of venture capital investments is surpassing 2023 figures.
This recovery in the venture market follows a period of economic adjustment where central banks have lowered interest rates and inflation has started to stabilise, creating a more conducive environment for investments. As a result, the size of funding rounds and corresponding valuations have increased.
Significant funding rounds in the UK during the third quarter of 2024 include Flo’s £156m Series C, Amber Therapeutic’s £78m Series A, and Dexory’s £60m Series B. These highlight the trend towards larger deal sizes.
The report notes a rise in median pre-money valuations at both pre-seed and venture growth stages, with pre-seed valuations averaging £3.2m, a 31% increase from the previous year. In contrast, early-stage valuations have seen a downturn.
Compared to the rest of Europe, UK valuations at the seed and venture growth stages are slightly lower, with seed stage averages at £4m and venture growth at £16.8m, compared to Europe’s £4.5m and £20.8m, respectively. PitchBook suggests that the UK’s varied deal sizes and wider range of valuation points could be influencing these medians. Nevertheless, the UK remains a strong indicator of broader European trends in venture capital.
The UK venture capital market is showing robust signs of recovery with increasing valuations and deal sizes, despite fewer deals overall.
