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Documentos de Cultura
About Beauhurst
01 02
Foreword. Summary.
10 12
Deal sizes. Sectors.
24 28
5 years on. Geography.
04 08
2016 in review. Biggest deals of 2016.
16 20
A future for apps? Investors.
32
Methodology.
Foreword.
A year ago we predicted that 2016s investment numbers would be flat on 2015s. At the time, we
thought that was a pessimistic outlook. It looks like we werent pessimistic enough.
The figures speak for themselves: deal numbers and investment are both down in double figures.
Even the relatively new kids on the block, crowdfunding platforms, havent escaped the negative
trend, with their deal numbers falling by 14%.
But there are still some things to celebrate from 2016. We saw some mammoth investments made
into UK companies that genuinely have the potential to be world-leaders in their industries. We
saw a number of successful exits, demonstrating that the cycle of investment can indeed pay off.
And even crowdfunders had something to celebrate, with their reach expanding significantly into
the funding of later-stage companies.
I fear that this foreword is not complete without mention of Brexit. Ill keep it brief. Despite the
broader decline, we saw no significant drop in deal numbers after the EU referendum, suggesting
Brexit has had little to no short-term impact on equity investment. The long-term effects, of course,
remain to be seen.
I want to take this opportunity to thank our team for putting together this report. As a high-growth
business ourselves, it is always fascinating for us to dive deep into the data on companies at vari-
ous stages of development and look at the trends in the landscape as a whole. I hope you find the
data and our analysis useful and interesting to read.
A favour: if you enjoyed reading this report, please do share with your colleagues, and let us know
what you thought of our findings on social media, or even by good old-fashioned email.
Kind regards,
Toby Austin
toby@beauhurst.com
@Beauhurst
1
Summary.
Key Figures Compared with 2015
1 >90 1 >20
Camden Edinburgh
Hackney
Cambridge
Oxford
Cardiff
Westminster
BUSINESS
GROWTH FINANCE
SEEDRS CROWDCUBE FUND WALES
2
Deal Numbers and Amount Invested in 2016
250m
200m
250m
100m
50m
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
GROWTH GROWTH
128m Skyscanner
19% 61%
33%
80m Kymab
76m FarFetch
41m Student.com
3
2016 in review.
1.1b 350
1b
300
900m
800m
250
700m
200
600m
500m
150
400m
300m 100
200m
50
100m
4
18%
Following a slowdown in growth in 2015, yearly deal
numbers fell for the first time, by 18%. The total
amount invested also fell by 12% from 2015.
12%
equity investment. The long-term effects remain to be
seen.
5
Deal Numbers and Amount Invested
Amount Invested
600
77.5m
550
2.5b
500
450
400
350
300
250
200
150
100
50
6
Until 2016, equity investment into UK beginning to see the first exits from
companies had increased every year investments made at the beginning
since 2011. That was true despite of the equity crowdfunding era
quarterly drops, despite a change of Where we are today is roughly where
government, and despite an initially peer-to-peer lending was when insti-
turbulent economy. Now, examining tutional investors first entered that
full year data, it has fallen for the first space.
time. Both the number of deals and Similarly, Crowdcube comment-
the amount invested overall declined ed that From our discussions with
(by 18% and 12% respectively) in entrepreneurs, it is clear that many
2016. What happened? put fundraising plans on hold in
The decline was felt most keenly anticipation of the referendumIts
by companies in their venture stage, encouraging to see that the crowd-
7
The biggest
deals of Edinburgh
City Council
2016. Salford
City Council
Cambridge
City Council
Oxford
City Council
Eastleigh
Borough Council
Camden London
Borough Council
City of London
Westminster
City Council
Islington London
Borough Council
London Borough
of Redbridge
Lambeth London
Borough Council
Southwark London
Borough Council
8
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
128m
41m
100m
30m
40m /
36m
210m 39m
35m
76m
41m
30m
38m
40m
9
Deal sizes.
Seed-stage deals
Number of Deals 20112016 by Deal Size
1100
1000
900
800
700
600
Seed Venture Growth
500
400
300
200
100
10
All Equity Fundraisings 20112016 by Investment Size
400m
350m
300m
250m
200m
150m
100m
50m
11
Sectors.
Most sectors saw a decline
in both deal numbers and
amount invested. The sectoral
distribution of deals and
investment remained stable.
550
500
450
400
350
300
250
200
150
100
50
12
2016 Deal Distribution
1200
1100
500
400
Technology/IP-based Businesses
Business and Professional Services
Industrials
Media 300
Leisure and Entertainment
Personal Services
Retail
Built Environment and Infrastructure 200
Telecommunications Services
Energy
Craft Industries
Supply Chain
Tradespeople 100
Agriculture, Forestry and Fishing
Transportation Operators
2015 2016
13
Despite falling deal numbers its been
a good year for Life Sciences, with
some high-profile investments and
an upsurge in both deals and amount
invested for seed-stage businesses.
240
200
160
120
80
40
14
Life Sciences Deal Numbers and Amount Invested Early-stage Life Sciences
This analysis is based on double counted sector figures. storms ahead.
Amount Invested Seed Venture Growth Despite an overall dip in deal num-
bers and amount invested, invest-
500m ment into Life Sciences is booming.
Seed-stage investments into the
sector have weathered the invest-
ment slump well with deal numbers
400m increasing every year, up 19% from
2015. The amount invested has also
grown continuously this year by a
staggering 182% to 202m.
300m
40
19%
30
20
increase in Life
Sciences deal
10
numbers at the
seed-stage.
15
A future for apps?
500m
196 195
450m
400m
350m
300m 131
250m
200m
150m 68
100m
38
50m
16
In October 2016, Time Out acquired suggest several things: investors
events app YPlan for 1.6m. There became more willing in 2016 to
was nothing unusual about this ex- plough finance into consumer-orien-
cept that YPlan had previously been tated technology, previously-funded
valued at 41.6m. It had been backed app companies gradually became
by Octopus Ventures, Nokia Growth self-sustaining and no longer need-
Partners, Qualcomm Ventures and ed or wanted equity backing, or
others. The business had struggled prospective entrants to the market
with its value proposition, structure, were put off by what they saw as
and financials, at one point laying off relatively limited finance available
around a third of its staff, and pivot- and steep competition to get it or
ing from direct sales to a self-service some combination of these factors.
model in which event organisers What is clear, however, is that the
manage their own listings. amount invested is growing while the
In the following weeks, Beauhurst number of deals is shrinking with
received information suggesting the average deal size in 2016 rising to
that YPlan was far from the only app 2.87m.
headed down this path. An unnamed Its also interesting to note that
source, whose company was at the most prolific funders behind this
the time advising three app-based capital are not exclusive or difficult
companies with a combined valua- to access: the two top spots are
tion of 75m, contacted Beauhurst to held by Seedrs (65 fundraisings) and
divulge that all three were insolvent, Crowdcube (57). That said, the real
had rapid cash-burn problems, and money is not from crowdfunders but
were running out of road when it institutional and governmental in-
came to their investors. vestors: the largest funders by value
of fundraisings were Skyscanners
So whats happening to the backers at the start of 2016 (Artemis,
app market? Baillie Gifford, Kazanah Nasional
Berhad the sovereign wealth fund
In brief, the rumours dont stack up. of the Malaysian Government Vir-
The amount of cash invested into the tuvian Partners, and Yahoo! Japan).
app industry has rocketed since 2011, This 128m investment has inevita-
from 67m to just over 560m. This bly pushed up the averages under
is also true, however, of the number discussion (without it, the average
of fundraisings into the space, which investment into a 2016 app company
has accelerated from a mere 38 in would diminish to 2.23m, a 22% fall
2011 to 195 in 2016. The average from the actual average, but none-
amount invested per fundraising, theless a steep increase from the
therefore, has also changed. In 2010 average of 1.36m in 2015 ).
the average invested in each was
1.8m. The number of fundraisings by Then why are app companies
app companies peaked at 232 in 2015 so concerned?
(at an average of 1.24m each). And
in 2016, the trend reversed: the value All the above goes to suggest that,
of fundraisings increased whilst their in fact, there has never been a
volume decreased. better time for young app-based
This latest development could companies. So are we to discard the
17
Ones to watch.
18
anecdotes above as just that anec-
dotal? Not quite so fast.
In 2013, 70% of investment into
mobile app companies came whilst
the companies were still in their
seed stage. That figure held constant
throughout 2014. But in 2015, it fell
to 65%; venture-stage companies
had picked up the slack. By 2016,
Young app
companies at their seed stage; the
rest were into venture-stage (31%)
19
Investors.
134
124
140
130
120
110
100
90 48
37
80
70
60
50
40
30
20
10
BUSINESS
GROWTH SCOTTISH
SEEDRS CROWDCUBE FUND ENTERPRISE
20
Crowdfunding platforms stay
Crowdfunding platforms at the top of the charts.
Seedrs and Crowdcube taking first and second place for the
third year in a row. The two platforms
22 22 21 21 19 18
LONDON
FINANCE CO-INVESTMENT PARKWALK ENTREPRENEUR MERCIA
WALES SYNDICATEROOM FUND ADVISORS FIRST FUND
21
Deal numbers fall for most
investor types, but accelerators
charge ahead. Crowdfunding is
emerging as a real alternative
at the later stages of growth.
280
260
240
220
200
180
160
140
120
100
80
60
40
20
22
PE/VC and Crowdfunding Deal Numbers Seed Venture Growth
200
160
120
80
40
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
80%
of companies crowdfunding at
the growth-stage were using
crowdfunding for the first time.
Angel Network Any Government Crowdfunding Private Equity/Venture Capital Private Investment Vehicle
23
Five years on.
Exits and Failures from 2011 Cohort Stage of Evolution at Time of Acquisition
EXITED SEED
15% 11 9%
134 VENTURE
ACTIVE
31%
72%
36
GROWTH
60%
658
69
DEAD
13%
114
24
15% of the businesses that raised the 2011 cohort that were acquired
equity finance in 2011 have exited: raised 12.3m of funding before
this means that 134 businesses have being acquired; whereas the average
either been sold or listed on a stock amount raised by the whole cohort
exchange. is 8.5m. Similarly the acquired com-
panies had been incorporated for 10
IPOs and half years before being bought,
whereas the average age of each
Of the 2011 cohort 18 companies company in the cohort is just over 9
2% floated on public stock exchang- and half years. The 658 companies
es, predominantly AIM. The two that are still going will need to raise
largest IPOs, however, were on to the a little more money and trade for a
LSE main board. Between them these little longer before they can expect to
18 companies raised a total of 940m exit in this way.
across their initial public offerings.
It will come as no surprise that Valuations
all but two of the companies were
strongly Technology-based. More How are the 658 businesses that
strikingly, however, a third of the havent exited faring? On average,
companies that listed were operating where weve been able to calculate
in the Life Sciences space. As drug de- a valuation, they were worth 2.97m
velopment processes are extremely in 2011. Theyre now worth 12.7m,
capital intensive, it makes sense that an increase of 328%. Whilst valuation
these businesses would turn to public growth doesnt substantively prove
markets for the funding they need. that the underlying businesses are
doing better, it shows that investors
Acquisitions are confident enough in their pros-
pects to pay more for a stake in them.
13% of the businesses that raised
equity money in 2011 have since The failures
been acquired: some were acquired
by private equity funds, and some Above weve focussed on the success-
were acquired by other companies. es, the growths, the exits. But whats
The most common types of acquirer the story when we look at ventures
were UK companies, followed by US that didnt go quite as planned?
companies. Below we look at the companies that
The majority of businesses were have died: this is when a company
acquired when they were at the has gone into liquidation and even-
growth stage, which makes sense: tually ceased trading. As we often
by that point they were large enough hear, 90% of all startups fail, but
for their acquirer to notice them. The what does receiving investment do to
largest acquisition was that of Sky- these odds? Are there certain sectors
scanner, acquired by Ctrip for 1.4bn. that are more vulnerable to failure,
It is reassuring to see so many and even once they have received equity
such valuable acquisitions, but the backing?
real question is whether there are In the same cohort of companies
more to come and how many? that raised equity in 2011, 12% are
On average the 116 businesses in currently classified as dead. But this
25
Largest IPOs Largest Acquisitions
1 360m 1 $1.4b
LSE Main Board
2 200m 2 $250m
LSE Main Board
3 123m 3 $200m
NASDAQ
4 68.8m 4 $180m
AIM
5 27.6m 5 $160m
AIM
Dead Exited
14% Industrials 7%
26
figure isnt uniform across sectors, totalling 138m in 2011. Strikingly,
and it is this disparity that proves only 2% of these companies are now
interesting when we delve a little classified as dead. So it should be
deeper. no surprise that London has been
CleanTech is a sector that receives named the worlds leading city for
a lot of buzz off the back of its green Fintech in a recent report commis-
credentials. In 2011 we witnessed 93 sioned by the Treasury.
equity investments totalling 221.5m Another sector with a similarly low
into 87 CleanTech companies. Of company death rate is Life Sciences,
these companies, 21% are now dead. where only 7% of the companies that
This is significantly greater than the raised funds in 2011 are now dead.
cross-sector average, which raises The UK governments industrial
questions as to the reasons behind strategy indicates increased support
this apparent high failure rate. Is it for Life Sciences; but government
the relative youth of this sector? The support is already having an impact
macro climate of falling fuel prices? in the sector, as it is across the whole
One of these dead CleanTech cohort. Innovate UK grant recipients
companies is Aquamarine Power. The in the 2011 cohort had a failure rate
company received more investment nearly half the average, at 4%.
than any of the other CleanTech com-
panies in the 2011 cohort: 53.7m So what have we learned?
between 2009 and 2014. They were
based in Edinburgh, developing and The findings are positive. The chanc-
manufacturing technology that uses es of a successful exit are high across
waves to produce electricity. Despite all-sectors: the most likely kind of exit
the enthusiasm surrounding their is an acquisition by another UK com-
progress and the numerous grants pany. The chances of failing (after five
received from the EU and Innovate years) are lower than the chance of
UK, their valuation peaked at 85.9m, exiting. Some sectors are more prone
following a 17.7m investment in to failure than others, while compa-
January 2011, and successively fell nies that have received public grants
until they ceased trading in Novem- are less likely to fail. Even if compa-
ber 2015. They cited the economic nies havent been acquired or floated
climate and the lack of private-sector (or gone bust), on average their paper
backing as the reason behind their value has increased.
rapid demise. This is how things stand after five
With government plans to cre- years with this cohort of businesses,
ate Europes largest CleanTech hub and hopefully indicates a positive
in London in partnership with the outlook for high-growth companies
Imperial College Centre for CleanTech in the UK. However, it could well be
Innovation, and with the support of that the current climate is not so
the London Sustainable Develop- conducive to success. We will have to
ment Commission, the chances for wait and see.
similar CleanTech ventures might be
set to improve.
At the other end of the spectrum
sits the Banking and Financial Ser-
vices companies of the 2011 cohort.
The 45 companies received funding
27
Geography.
London
West Midlands
1300 East Midlands
North East
Scotland
1100 South East
South West
Yorkshire and Humberside
Wales
900
Northern Ireland
East of England
North West
700
500
300
100
28
Percent Change in Deal Numbers
30%
20%
10%
0%
Scotland
North East
North West
Yorkshire and
Humbeside
West Midlands
East Midlands
East of England
Wales
South East
South West
London
Northern Ireland
10%
20%
30%
40%
London takes half of all London Percent Share of Equity Investment Amount Invested
fundraisings in 2016. Deal Numbers
10
29
Camden
Hackney
Westminster 1 >90
Hackney was the top local author- Cambridge and Edinburgh take the
ity by deal numbers both in the only non-London spots in the top ten
capital and in the whole of the UK. local authorities for deal numbers
The London borough saw 153.5m this year, coming in seventh and
invested over 88 equity investments, ninth place respectively. Cambridge
with Camden in close second with 85 saw 295.6m invested over 40 deals,
deals worth 255.6m. Westminster while Edinburgh saw 155m invested
saw a huge 380.4m invested over over 29 deals. The two cities have
83 deals 11% of the total amount made the top ten every year since
invested in the UK in 2016. data collection started in 2011.
30
Edinburgh
UK Deal Numbers
1 >20
Manchester
Cambridge
Oxford
Cardiff
Bristol
31
Methodology.
32
What we include when analysing UK equity investment
Investor participations
We attribute each deal to however
many investors were involved in the
deal provided they received new
shares, regardless of the number or
value of shares received.
Pre-emption participations
We include all participations by
investors, even if their contribution
to a given round only represents the
exercise of pre-emption rights.
33
What we do not include Further details
34
Location Contingent funding
This information is based on the If a company receives a commitment Data for this report was
head office location of the company for 10m subject to certain mile- finalised on 19/01/17.
receiving investment. For example, stones being achieved but first gets Deals disclosed after this date
if a company has offices in multiple 5m, the entire 10m is included in are not included.
cities or was founded in a particular our data.
city but has moved its headquarters,
our data only reflects this headquar- Timing
ters address. Investments are allocated based on
the date given in the announcement
Second closing of a round of the deal. This may differ from the
If, for example, a company completes date on which the deal legally closed.
a second closing of its Series B round On occasion we see deals announced
for 5m this quarter having previous- later than the date given, for exam-
ly closed 2m last quarter (for a 7m ple, a press release may be distribut-
total), only the 5m second closing is ed in May that discloses that a deal
included in our data this quarter with happened in March. In this case we
the 2m first closing counting to- will take March as the deal date.
wards the previous quarters figures.
Overfunding
If a company sets out to raise a
certain amount of money (via e.g.
equity crowdfunding), but continues
its fundraising after it has reached
that amount, and then does manage
to raise that second amount, we
would count this as one deal, placing
it at the date on which the second
amount of money was raised.
Close deals
If a series of similar deals are an-
nounced for the same company
within a short time period and these
in our opinion actually form one
single deal then we will count these
in aggregate as one deal.
Ongoing fundraising
If a company indicates the closing of
1m out of a desired raise of 10m,
our data only reflects the amount
that has closed.
35
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36
x
37
Beauhurst is the leading provider of deep data on
ambitious, high-growth UK companies.
Text: Henry Whorwood, Ella Halmari, Jonathan Ross, Eleanor Sharman, Nina Coldham
Data: Simone Dauti, Lucy Coutts, Zahra Mawji
Production: Ella Halmari Beauhurst 2017
38