Of UK private companies raising between £1 million and £20 million of growth equity capital each, 767 UK businesses raised a total of £3.67 billion in 2020, down on 2019 and 2018. Average deal size in 2020 was also down compared to 2019 from £4.93 million to £4.78 million, though it remained higher than the average deal size of £4.52 million seen in 2018.
However, if we examine 2020 quarterly data, we can see it was clearly a year of two halves. A fairly slow Q1 and extremely difficult Q2 were followed by something of a rebound in the second six months of the year. Q4 saw a 7% increase in the number of deals compared with Q3, with more deals completing in the last three months of the year than in three out of the four quarters of 2019.
The IT sector remained the most popular for investors throughout 2020, accounting for over 40% of deals in the final quarter. Investment in the B2C and healthcare sectors also remained strong throughout the year.
It is encouraging to see the UK’s growth capital market only temporarily pushed off course before resuming more normal levels of activity. We believe there is light at the end of the tunnel, even if the tunnel is a bit longer than we might have wished for.