Venture capitalists put up a stonking show last year with over £1bn of VC money invested in UK and Irish high-tech start-ups in 2008, according to Ascendant the technology-focussed investment group. It is the highest level of VC high-tech investment since 2001.
The figure was 15 per cent up on 2007. A surprised sounding Stuart McKnight, CEO of Ascendant says: "We have triple checked our analysis. The simple truth is, as we all know, that there is venture capital available in the UK and Ireland and it is being invested. However, this cash is going in bigger amounts to a smaller amount of companies - bigger bets are being placed."
McKnight adds: "It would be tempting to say that VCs are retreating to the safe haven of later stage deals and increasing syndication to reduce their risk, but at this time there is very little evidence to support this. Over 96 companies received 1st round finance in 2008 which compares very favourably to whole market of 253. VCs invested over £230m in these early stage companies with more being committed in H2 rather than HI."
In 2008, £1,001m (£872m in 2007) was invested in 253 deals (242 in 2007) by 258 investors (282 in 2007)
In Q4 2008, investors continued to commit additional funds to the sector, with £229m being invested in 55 companies
The busiest investors were Scottish Enterprise, NorthStar Equity, Amadeus, Eden, Enterprise Ireland, Accel, Balderton, Bank of Scotland, 3i and YFM Group
Levels of syndication remained unchanged over 2007 with 62 per cent of deals involving more than one investor
19 per cent of deals over £0.5m had some private investor/angel participation - up from 13% in 2007
The 10 biggest deals took 3 per cent of funds invested. The trophy deals were: Icera Semi (2 rounds £67m), Spinvox (£50m), Arts Alliance Media (£39m), G24i (2 Rounds £25m), Plastic Logic (£25m), TDX Group (£25m) Money Expert (£25m), Realtime Worlds (£20m), Patersons HR (£20m) and Complinet (£19m).
The hot sub sectors were Internet/Wireless Services (up 66 per cent) and Software (up 4 per cent).
The value of Cleantech investments showed a sharp drop - 37 per cent. Possibly a result of the falling price of oil.
The Internet/Wireless Services sector was the single biggest sector. Sixty seven companies took £279m. SpinVox, MoneyExpert, Miniweb, Badoo, Seatwave, Enqii and Playfish all raised more £10m.
As for 2009, Ascendant is less bullish. "Most VCs are very downbeat and are not optimistic about 2009", says McKnight, "however these stats show that the market is still very much alive and active. Balderton, Accel and Atlas have all raised new funds and we have we have anecdotal evidence that LPs are reassessing the commitment to Private Equity as many other asset classes are performing so badly. We expect value and volume of VC tech deals to decline in 2009 but perhaps not as much as some are predicting."