Large investors drawn to innovative West businesses

Large companies and foreign investors have ploughed £808,000 into innovative small businesses in the South West in just three months, new figures reveal.

Statistics for Q3 2021 show that 10% of all deals involving corporate venture capital (CVC) took place in the South, including the South West.

KPMG UK’S Global Venture Pulse Survey reveals that CVCS have “South West innovators in their sights” as investment levels reach new heights across the UK, with £19.5bn raised by UK scaleups so far in 2021. CVCS involve a large corporate directly investing into a smaller, external start-up.

Significant South West investment in 2021 included Bristolbased Artificial Intelligence and Machine Learning accelerator Graphcore securing £162m in a funding round led by investment management giant Baillie Gifford.

Graphcore is using the funding to support its expansion both globally and into new markets, such as voice recognition and driverless cars.

Overall, capital was raised across 73 deals in the region, representing a tenth of all UK deals by volume during the quarter and 9% of all UK deal value.

Kay Drury, transaction services partner at KPMG in the South West, said: “It’s been encouraging to see the strong investment in the region over the last few months, despite ongoing tailwinds as a result of the

pandemic. Businesses in our region are continuing to show international investors why the UK, and the South in particular, is such a valuable place to invest.”

The KPMG survey found there was a record high of more than £6.5bn invested by venture capital (VC) in UK scale ups over the summer of 2021. After two extraordinarily high quarters in 2021, UK scale ups continued to attract funding from across the globe in Q3 21, with eager investors prepared to pay premium prices for UK innovators with a proven track record.

Nearly £20bn of VC investment has been raised so far this year by scale ups in the UK. Other companies also attracted funding - such as virtual event platform Hopin (£330m), electric vehicle subscription service Onto (£175m), and flower deliverers Bloom & Wild (£125m).

Bina Mehta, chair of KPMG UK and head of the firm’s UK Emerging Giants Centre of Excellence, said: “The strength of the UK innovation brand is flying high with areas such as artificial intelligence (AI), cybersecurity and Fintech attracting interest and finance.”