Equity Investment
Market Update
Q3 2020
1
•
The amount raised in Q3 2020 totalled £2.70b — a 48% increase from the previous
period and a 1% drop from Q3 2019.
•
Deal numbers declined to their lowest point since Q4 2016. A total of 402 deals were
announced during the quarter, a 12% decrease from the previous quarter and a 7%
decrease from Q3 2019.
•
The number of seed stage deals dropped 20% from Q2 2020, and first-time
fundraising fell to a new low. Just 87 companies announced their first fundraise in
Q3 2020, down from a high of 214 in Q2 2014.
•
Fintech had its second best quarter on record, with 60 deals completed. Meanwhile
artificial intelligence saw investment activity slow for the third quarter.
•
For the first time on record, all-female founding teams raised more than double the
funding of mixed gender teams. This was driven by sister-led Karma Kitchen's £252m
round—the largest deal of the quarter.
Key findings
The latest data on equity investment trends in the UK. We’ve
analysed every publicly-announced equity fundraising in Q3 2020,
to spot emerging trends and patterns in the market.
402
Number of deals
£2.70b
Amount invested
-12%
Change from Q2 2020
-7%
Change from Q3 2019
+48%
Change from Q2 2020
-1%
Change from Q3 2019
2
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3
Big deals keep on churning—deal numbers keep on burning
Just 402 investments were completed in Q3 2020, a
12% drop from the previous quarter and a 7% drop
from Q3 2019. Quarterly fluctuations in investment
figures are normal, but this three-quarter-long drop
in deal numbers is the most prolonged on record.
We expect deal numbers for 2020 to land somewhere
between those of 2016 (1,607) and 2017 (1,856)
by the end of the year.
On a more positive note, the amount raised in Q3
2020 remained relatively high, totalling £2.70b. This
marks a 48% increase from Q2 2020 and just a
1% drop from Q3 2019.
Of the deals that have been completed, a significant
proportion went to later-stage businesses that
require—and are more able to take on—larger sums
of money.

deal numberS and amount raiSed by quarter
deal numberS and amount raiSed by year
£0.5b
£1.0b
£1.5b
£2.0b
£2.5b
£3.0b
£3.5b
100
200
300
400
500
Q1
2011
Amount raised
Number of deals
Q1
2012
Q1
2013
Q1
2014
Q1
2015
Q1
2016
Q1
2017
Q1
2018
Q1
2019
Q1
2020
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
£2b
£4b
£6b
£8b
£10b
£12b
0
500
1000
1500
2000
Amount raised
Number of deals
4
First-time fundraisings tumble to a record low
Just 22% of deals announced in Q3 2020 were a
first-round raise for the recipient company. This
compares with 31% in Q3 2019.
But it's only natural for this proportion to drop as
the market matures and a larger number of later-
stage businesses continue to raise finance. It seems
this decline is in keeping with the previous trend
seen well before the outbreak of coronavirus.
Just 87 first-time raises were completed between
July and September. This is the lowest number on
record, and marks a 59% decline from a high of 214
in Q2 2014. Still, first-time raises remain the modal
round—for now.
deal numberS and amount raiSed, firSt round fundraiSingS
percent Share of total dealS, by round number
£0.2m
£0.4m
£0.6b
£0.8m
£1.0b
50
100
150
200
Amount raised
Number of deals
£1.2b
Q1
2011
Q1
2012
Q1
2013
Q1
2014
Q1
2015
Q1
2016
Q1
2017
Q1
2018
Q1
2019
Q1
2020
2015Q12015Q22015Q32015Q42016Q12016Q22016Q32016Q42017Q12017Q22017Q32017Q42018Q12018Q22018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q22020Q320%
40%
60%
80%
100%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
5
All-female teams have a record quarter
All-male and mixed-gender founding teams both
suffered a drop in deals completed this quarter,
with a decrease of 12% and 31% since Q2 2020,
respecitvely. All-female teams, however, have
sustained the same rate of investment as
Q2 2020, with 27 deals.
Still, all-female founding teams secured just 7% of
all equity investments in Q3, despite making up 10%
of all active high-growth companies.
For the first time on record, all-female founding
teams raised more than double the funding of
mixed-gender teams. This was largely driven by a
£252m investment led by Vengrove Real Estate
Management into Karma Kitchen, run by sisters
Eccie and Gini Newton. Karma Kitchen operates
several industrial kitchen spaces which can be hired
when businesses do not have the space themselves.
This was the biggest round of the quarter, and will
fund expansion across the UK and Europe.
number of dealS by gender of founding team
amount raiSed by gender of founding team
50
100
150
200
250
300
350
400
All male founding teams
Mixed gender founding teams
All female founding teams
Q1
2011
Q1
2012
Q1
2013
Q1
2014
Q1
2015
Q1
2016
Q1
2017
Q1
2018
Q1
2019
Q1
2020
£0.5b
£1.0b
£1.5b
£2.0b
£2.5b
£3.0b
All male founding teams
Mixed gender founding teams
All female founding teams
Q1
2011
Q1
2012
Q1
2013
Q1
2014
Q1
2015
Q1
2016
Q1
2017
Q1
2018
Q1
2019
Q1
2020
6
Earlier-stage businesses lose out on investment
The number of seed stage deals ended on 161 by the
end of September. This marks a 20% drop from Q2
2020, but just a 6% drop since Q3 2019. Just £128m
was invested into seed stage businesses, the lowest
amount since Q3 2017.
Venture stage deals dropped 11% from Q2 2020,
but remained on par with Q3 2019. After a steady
increase in deal numbers between 2011 and 2016,
they now look to be levelling out. But the amount
invested through these deals has reached a new
high, with £897m deployed over the course of Q3.
Meanwhile, growth and established stage
investments saw a slight uptick in both deal
numbers and amount raised since Q2 2020. But
neither reached anywhere near their respective
records in previous quarters.
number of dealS by Stage of evolution
amount inveSted by Stage of evolution
2011 Q3
2012 Q3
2013 Q3
2014 Q3
2015 Q3
2016 Q3
2017 Q3
2018 Q3
2019 Q3
2020 Q3
50
100
150
200
Seed
Venture
Growth
Established
2011 Q3
2012 Q3
2013 Q3
2014 Q3
2015 Q3
2016 Q3
2017 Q3
2018 Q3
2019 Q3
2020 Q3
£0.5b
£1.0b
£1.5b
£2.0b
Seed
Venture
Growth
Established
7
Average deal size increases as few early rounds take place
Just 27% of equity deals were worth less than £500k
in Q3, the lowest proportion since our records began
back in 2011. This is reflective of a drop in seed and
venture stage investments, which are naturally at
the smaller end of the scale.
Nine megadeals took place throughout the
quarter—the same number as Q3 2019 and three
more than Q2 2020.
Between Q2 and Q3 2020, the median deal size
increased across all stages of evolution: 16% at the
growth stage; 82% at venture; and 13% at seed.
This means that small sums of capital which help
promising businesses get up and running are
becoming harder to come by, with investors moving
towards larger deals with less risk. This trend has
been apparent for the past several years, and has
been catalysed by the current economic uncertainty.
percent Share of total dealS, by deal Size
median deal Size acroSS StageS of evolution
2011 Q12011 Q22011 Q32011 Q42012 Q12012 Q22012 Q32012 Q42013 Q12013 Q22013 Q32013 Q42014 Q12014 Q22014 Q32014 Q42015 Q12015 Q22015 Q32015 Q42016 Q12016 Q22016 Q32016 Q42017 Q12017 Q22017 Q32017 Q42018 Q12018 Q22018 Q32018 Q42019 Q12019 Q22019 Q32019 Q42020 Q12020 Q22020 Q320%
40%
60%
80%
100%
£50m+
£10m-£50m
£5m-£10m
£2m-£5m
£1m-£2m
£500k-£1m
£0-£499k
2011 Q3
2012 Q3
2013 Q3
2014 Q3
2015 Q3
2016 Q3
2017 Q3
2018 Q3
2019 Q3
2020 Q3
£2m
£4m
£6m
£8m
£10m
£12m
Seed
Venture
Growth
8
The biggest deals of the quarter
£252m
Karma Kitchen
Karma Kitchen builds, equips, and
manages co-working, commercial
kitchens in industrial spaces, for hire by
businesses who don’t have their own
facilities.
Deal date
15/07/2020
Location
London
Total raised £252m, 2 deals
£248m ($319m)
TransferWise
TransferWise has developed a secure,
online platform which allows individuals
and SMEs to instantly spend, get paid,
and transfer money abroad, using real
exchange rates.
Deal date
28/07/2020
Location
London
Total raised £552m, 10 deals
£200m
Gymshark
Gymshark is a fitness brand and online
retailer which manufactures a range of
sportswear and accessories for men and
women.
Deal date
14/08/2020
Location
West Midlands
Total raised £200m, 1 deal
£154m ($200m)
Snyk
Snyk offers a range of developer
tools which enable software-driven
businesses to stay secure by finding
and fixing vulnerabilities in open source
libraries or containers.
Deal date
09/09/2020
Location
London
Total raised £354m, 8 deals
9
Fintech's back and eHealth's on the rise
Fintech had its second-best quarter on record, with
60 deals completed between July and September.
These deals are worth a combined £1b. Fintech is
now set to have a record-breaking 2020, in terms of
both deals completed and amount raised.
eHealth and digital security companies also had
good quarters, with 15 and 20 deals respectively.
The largest eHealth deal was a £23m round for
Lumeon, which develops software for medical
practitioners to help them track the progress of
patients and keep up to date with admin tasks.
Meanwhile artificial intelligence saw a slow down in
investment activity.
Surprisingly, with such a focus on at-home and
self-isolated education, investment into edtech
companies has remained relatively subdued
over the past few quarters. Just seven deals were
completed in Q3 2020, compared to ten in Q3 2019.
number of fundraiSingS, Selected verticalS
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
0
10
20
30
40
50
60
Digital security
eHealth
Artificial Intelligence
EdTech
Life sciences
FinTech
Author
Hannah Skingle
Design
Ella Halmari
© Beauhurst 2020