2
4
6
8
10
12
13
14
16
17
18
19
21
26
32
36
40
Year in Review


Key findings


Foreword


Biggest deals of the year


Headline figures


Investment stages and brackets


Megadeals


Valuations


Regional trends


Sectors


Founder gender


Investor types


The crowd
Postscript Perspectives


The Hedge Fund-ification of Venture Capital


Cleantech Investment Finds Renewed Energy


Rolling the Dice on Gamification


Emerging Technologies to Watch in 2022


About Beauhurst
Data for this report was finalised on the 28th January 2022
To be included in our analysis, an investment must be:
• Dated between 1 January 2011 and 31 December 2021
• Publicly announced or privately disclosed to Beauhurst
• Some form of equity investment
• Secured by a non-listed UK company
Small ticket rounds are harder to come by,
whilst larger ticket rounds skyrocket
Just 29% of deals in 2021 were worth less than £500k
(compared with 40% in 2020), whilst 5% were worth more than
£50m (compared with 2% in 2020).
2
Key fi ndings
17% increase in deal volume,
100% increase in deal value from 2020
Investors deployed more than double the amount of capital to
private UK companies in 2021 than in 2020, rising from £11.3b to
£22.7b. The number of deals completed also climbed, albeit at a
slower pace, from 2,283 to 2,679.
Unannounced fundraisings tip deal
numbers towards 7k
If we include deals that were not announced to the press, then
total investments in 2021 currently stand at 6,873 deals, worth
£26.5b, with more data still coming in.
Valuations hit new highs, with a median
pre-money of £5.70m
Valuations have continued to soar, growing 28% from a median
pre-money of £4.45m in 2020 to £5.70m. The median company
valuation in London was 1.6x higher than the rest of the UK.
3
Most regions have a record year, with the
greatest growth seen in the South West
Regional inequalities continued to grow, with a record 49% of
deals going to London-based fi rms, but many of the regions still
secured record levels of funding.
Several sectors fl ourish, including
cleantech and life sciences
Fintech remained the dominant high-growth sector in 2021,
with 310 deals announced in 2021, worth £6.57b. Cleantech
and life sciences also had a great year, but investor appetite for
cryptocurrency and blockchain companies slowed.
4
The Deal 2021
Ending 2020 with an unusually quiet festive
period, the UK rang in the New Year with
socially-distanced renditions of Auld Lang
Syne and yet another lockdown. But whilst
the stay at home orders were back, this third
lockdown was otherwise quite dissimilar to
the first and second. Individuals, companies,
and investors alike have become more resilient
to this way of life, and the economic and
political uncertainty that ensued from previous
restrictions were far less pronounced this time
around.
Indeed, the first three months of 2021 were a
record quarter for equity investment in the UK,
with the announcement of 760 deals—24%
more than the previous quarterly record of 612
in Q4 2020. And as restrictions waned over the
remainder of the year, and Sunak continued
his roll-out of an unprecedented economic
stimulus package, investors maintained their
confidence, deploying a total of £22.7b, across
2,679 announced rounds.
Of all the astounding growth we’ve witnessed
over the past year, the increase in the number
and value of megadeals (investments worth
£50m or more) is perhaps the most staggering.
We tracked 112 of these deals in 2021, totalling
£13.2b, up from 44 megadeals worth £4.93b
in 2020. The median company valuation has
rocketed alongside these figures, from £4.45m
in 2020 to £5.70m in 2021, although this varies
significantly between company stages of
evolution and headquarter location.
Whilst VCs retained their title as the most
active investor type, all categories increased
their activity in 2021, particularly individual
angel investors, finishing on 602 deals,
compared with 359 in 2020—surpassing the
number of deals facilitated by crowdfunding
platforms for the first time since 2014.
Regardless of crowdfunding’s slide to the
third most prolific investor type, the UK’s most
popular platforms, Crowcube and Seedrs,
maintained their position as the most active
facilitators of investment in the country.
Fintech remained the best-funded sector—no
surprises there—but the record level of deal
numbers seen in 2021 weren’t just focused
on finance, with new niches forming out of
centuries-old industries. While politicians
from around the world flocked to Glasgow for
COP26, investors were meeting with cleantech
Resilience,
Renewal &
Record Rounds
Henry Whorwood
Head of Research & Consultancy
Year in Review
5
The Deal 2021
startups and entrepreneurs, helping them to
develop innovative solutions to the climate
emergency, without also causing a cost of
living crisis. Meanwhile, ehealth investments
also stepped up, and gamifi cation reached new
levels, crossing over with an increasing number
of other sectors.
With so much capital seeking a home in the
private company asset class, and so many
different types of investors looking to allocate
that capital, funds are having to fi nd new
ways of differentiating themselves from the
competition. As my colleague Dan Robinson
will discuss later in this report, some are even
pivoting their operating model, beginning to
look increasingly like hedge funds, rather than
(as is usual) selective funds with a decade-long
exit horizon.
Although Beauhurst tracks both unannounced
investments and those made known to the
public through press releases and articles,
we’ve traditionally excluded unannounced
deals from our temporal analyses. This is
because they’re sourced from Companies
House fi lings, which are subject to a time lag,
making the most recent year quarters appear
defl ated until the dust settles.
But these unannounced deals make up around
70% of deal activity in the UK and 30% of all
pounds invested. So, in order to showcase
more accurate fi gures, in terms of both the
number and value of rounds, we’ve included
an additional graph this year, displaying
unannounced and announced deal data
together. In total, then, we’ve tracked £26.5b
invested, across an astonishing 6,873 rounds.
And caveat lector: that number will grow
higher over the next couple of months.
As always, I’d like to say a big thanks to all
those who have contributed their time and
expertise to this report. We hope that you enjoy
reading it as much as we’ve enjoyed creating it,
and are always keen to hear your feedback.
Have any questions or comments? Send us an
email at info@beauhurst.com
The fi rst three months of 2021
were a record quarter for
equity investment in the UK
6
The Deal 2021
Revolut
Location: London
Sector: Fintech
Fundraising date: 15/07/21
£578m $800m
Challenger bank Revolut operates an app in which
users can track and send money, trade crypto, and
access a range of fi nancial services. The company
has secured £1.27b in equity investment to date,
across nine rounds, and recently acquired US fi rm
Wanted and London-based Nobly.
CMR Surgical
Location: Cambridge
Sector: Robotics
Fundraising date: 28/06/21
£432m $600m
CMR Surgical is a medtech company that develops
robotics for use in surgical procedures. It has
raised nine equity funding rounds so far, totalling
£743m, from backers including Softbank Vision
Fund, Escala Capital, Tencent and Cambridge
Innovation Capital.
SaltPay
Location: London
Sector: Fintech
Fundraising date: 30/04/21
£358m $500m
SaltPay develops payment processing software
and point-of-sale technology for SME merchants.
The fi ntech company has raised two equity
funding rounds so far and made acquisitions of
four companies: Borgun, Pagaqui, Tutuka and
Paymentology.
Monzo
Location: London
Sector: Fintech
Fundraising date: 09/12/21
£359m $475m
Monzo operates a challenger bank app wherein users
can track and budget their money, instantly open
savings accounts, and access loans. The company has
secured £927m worth of equity funding, across 17
rounds, with participation from the likes of Accel,
Y Combinator and General Catalyst Partners.
The Biggest
Deals of 2021
7
The Deal 2021
7
Starling Bank
Location: London
Sector: Fintech
Fundraising date: 08/03/21
£272m
Starling Bank is a challenger bank that provides app-
based current accounts where users can track their
fi nances in real time. It’s raised eight equity funding
rounds so far, totalling £585m, with investors
including Merian Global Investors and Fidelity. It also
acquired Fleet Mortgages in July 2021.
Hopin operates an online platform for businesses
to plan, run and rewatch virtual or hybrid events.
The company has secured £743m of equity
investment, across six rounds.
Bought By Many
Location: London
Sector: Insurtech
Fundraising date: 01/06/21
£246m $350m
Bought By Many provides pet insurance, with a
range of insurance policies available, including
cover for pre-existing conditions. The company
acquired pet health products subscription service
VetBox late last year, and has raised £357m in
equity investment to date.
Zopa
Location: London
Sector: Fintech
Fundraising date: 19/10/21
£220m
Previously a peer-to-peer lending site, Zopa now
offers banking services via its mobile app, including
loans, credit cards, and car fi nance. It’s raised £516m
in equity investment, across 13 funding rounds. The
company’s backers include Augmentum Fintech,
Balderton Capital and Forward Partners.
Checkout.com
Location: London
Sector: Fintech
Fundraising date: 12/01/21
£333m $450m
Checkout.com develops software that allows
businesses to process its payments online in more
than 150 currencies. Backed by Tiger Global, Insight
Partners and Digital Sky Technologies, among
others, Checkout.com has raised £1.36b in equity
investment so far, in just four rounds.
Hopin
Location: London
Sector: Internet platform
Fundraising date: 05/08/21
Fundraising date: 04/03/21
£324m €380m
£287m $400m
8
The Deal 2021
For all the economic and political uncertainty
that carried through from 2020 into 2021, the
UK’s private investors continued their activity
full steam ahead.
We tracked 2,679 announced equity
investments into private UK companies over
the course of 2021. These deals totalled
£22.7b—more than double the amount
invested in 2020, and more than triple the
amount invested in 2016.
The first quarter of the year was the busiest in
terms of volume of deals completed, with 760
announced between January to March, whilst
the UK population was staying at home under
full lockdown for the third time since the start
of the pandemic.
Deal volume waned in Q2 and Q3, but picked
up again in Q4, with 667 announced between
October and December. The value of deals
fluctuated less, with a low of £5.37b in Q2 and
a high of £6.36b in Q3.
Headline
figures
Beauhurst is the only data provider to track
every equity fundraising into UK companies,
even those that aren’t announced to the public.
These unannounced rounds (also known as
stealth rounds) make up around 70% of deal
volume and around 30% of annual deal value,
representing a huge portion of equity activity.
We pick up on unannounced deals by
monitoring share allotment filings made to
Companies House. These are legally required
to be made within 30 days of the new share
issuance, but can take longer to come through,
which means these deals—unlike those that
are announced to the press—are subject to a
fairly significant time lag.
Because of this, unannounced rounds are
excluded from temporal analyses, in order
to display accurate trends over time. Figure
1.2 shows that the actual volume and value
of deals made in 2021 is at least £26.5b
across 6,873 rounds, with additional data still
trickling in each week.
A word on
unannounced deals
since 2020
17%
2,679
deals
since 2020
100%
£22.7b
raised
9
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£26.5b
£15.4b
£13.0b
£12.7b
£9.75b
£17.4b
£5.09b
£3.47b
£3.23b
£6.30b
£2.39b
5,055
5,457
1,747
4,150
2,372
6,441
6,551
6,669
6,852
6,873
3,092
Q1
Q2
Q3
Q4
£6.48b
£6.63b
£6.32b
£7.09b
1,720
1,655
1,976
1,522
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£22.7b
£11.3b
£11.9b
£4.4b
£9.4b
£6.9b
£3.7b
£7.9b
£1.6b
£2.1b
£2.b
1,641
1,656
1,472
521
1,879
2,679
1,933
2,037
799
1,065
2,283
Q1
Q2
Q3
Q4
£5.53b
£5.39b
£6.36b
£5.37b
652
667
760
600
1.1 Number of deals and amount raised since 2011, including announced deals only
1.2 Number of deals and amount raised since 2011, including announced and unannounced deals
10
The Deal 2021
2011
‘12
‘13
‘14
‘15
‘16
‘17
‘18
‘19
‘20
‘21
£2b
£1b
£3b
£4b
£5b
£6b
£7b
£8b
£9b
£10b
£11b
£12b
Established
Growth
Seed
Venture
£1.66b
£3.60b
£11.7b
£5.68b
2011
‘12
‘13
‘14
‘15
‘16
‘17
‘18
‘19
‘20
‘21
Established
Growth
Seed
Venture
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,172
983
372
152
2.1 Number of deals and amount raised since 2011, by stage of evolution
Every stage of evolution secured a record volume and value
of investment in 2021. For the third year in a row, companies
in the venture stage of evolution secured a greater number
of deals than those in the seed stage, with a hugely
increased lead in 2021. Indeed, venture-stage companies
saw a huge boost in the number of deals completed, up
23% from 2020, to 1,172. Companies at this stage have
signifi cant traction and a valuation in the millions.
Meanwhile, seed-stage companies only saw a 5% rise in
deal volume, ending on 983 announced investments in
2021, compared with 934 in 2020. Deals into growth-stage
companies increased by 31%, while deals into established-
stage companies increased by 36%.
Growth-stage companies saw the most notable increase in
deal value, rising 154% from £4.61b to £11.7b in 2021.
Investment stages
and brackets
For the best part of the last decade, investors have been
deploying increasingly large amounts of capital in single
rounds. This is a sign of a maturing market, with a greater
number of companies reaching the stage at which they
need and are able to take on signifi cant capital.
However, this trend has also coincided with a decline in
both the proportion and number of deals taking place
below the value of £500k. Just 713 deals (29%) were worth
less than £500k in 2021, compared to 835 (40%) in 2020
and 669 (35%) in 2019.
These small-ticket deals have traditionally been necessary
for younger companies to gain initial traction. But as capital
is now so cheap, it seems many companies are skipping
these smaller rounds in favour of slightly larger raises.
Indeed, less than 50% of fi rst-time equity raises in 2021
were worth less than £500k.
11
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
£50m+
£10m-£50m
£5m-£10m
£2m-£5m
£1m-£2m
£500k-£1m
£0-£500k
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
112
713
0
100
200
300
400
500
600
700
800
£50m+
£10m-£50m
£5m-£10m
£2m-£5m
£1m-£2m
£500k-£1m
£0-£500k
3.1 Number of deals since 2011, by investment size
3.2 Proportion of deals since 2011, by investment size
12
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
30
51
14
16
16
61
16
16
17
12
8
5
3
4
4
4
9
£100m+
£50m-£100m
3
2
2
1
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
£0m
£100m
£200m
£300m
£400m
£500m
£600m
The South
The North
The Midlands
London
Megadeals—investments that are worth
at least £50m—have become an integral
part of the UK’s innovation landscape, and
breached the 100 mark for the fi rst time in
2021. Despite their proliferation, there is a
clear regional inequality amongst these deals:
100% of megadeals in 2021 went to companies
headquartered in England.
Furthermore, only 25% went to companies
based outside of London. Because of the
size of these rounds, they often include
participation from foreign investors. Indeed,
87% of megadeals that took place in 2021
are known to have included participation
from a foreign investor, and 71% included
participation from at least one US fund.
Megadeals
4.1 Number of
megadeals since
2011
4.2 Number of
megadeals in 2021,
by region
13
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£0m
£10m
£20m
£30m
£40m
£50m
£60m
£70m
£8.27m
£2.40m
£73.9m
Growth
Seed
Venture
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£0m
£1m
£2m
£3m
£4m
£5m
£6m
£7m
£2.40m
£3.99m
£3.96m
£7.36m
£5.09m
Regional England
London
Northern Ireland
Scotland
Wales
5.1 Median pre-
money valuations
since 2011, by
stage of evolution
5.2 Median pre-
money valuations
since 2011, by
region
Median company valuations climbed across
every stage of evolution last year, but most
notably at the growth stage, rising 54%
from £48.0m in 2020 to £73.9m. This marks
the second year in a row that growth-stage
valuations have risen more than 50%. Given
megadeal trends, it stands to reason that
company valuations are far higher in London
than the rest of the UK; valuations in the
Capital pulled away from those in other regions
in 2017, and have maintained a signifi cant lead
ever since. Between 2020 and 2021, however,
there were similar levels of growth in median
company valuations between London, other
English regions and Northern Ireland.
Valuations
14
The Deal 2021
Scotland
8.6%
North East
2.9%
North
West
6.1%
Yorkshire and
the Humber
3.3%
East Midlands
2.0%
Wales
2.2%
West
Midlands
2.7%
East of
England
6.5%
South West
4.9%
South East
10.3%
Northern
Ireland
1.5%
London
49.1%
Regional
trends
Despite growing disparities between London
and the rest of the country, many regions saw
an uptick in deal volume and value in 2021.
Scotland and Wales were the only UK regions
not to secure a record number of deals.
The South West had the highest growth rate,
with 48% more deals secured in 2021 than in
2020, followed by the East Midlands, with a
37% increase.
Meanwhile, Wales, the South East, South West,
North West, East of England, Northern Ireland,
and London all secured a record amount of
investment. The South West again saw the
highest growth rate (232%), followed by the
North West (177%).
Companies in London saw deal volume
increase 23%, from 1,063 to 1,311, while deal
value grow 100%, from £7.62b to £15.3b.
6.1 Regional
distribution of
deals in 2021
15
The Deal 2021
£447m
£15.3b
151
London
South East
Scotland
East of England
North West
South West
Yorkshire and the Humber
North East
West Midlands
Wales
East Midlands
Northern Ireland
1,311
£77.4m
£557m
46
231
£315m
£2.09b
70
275
£313m
£1.79b
60
173
£183m
£929m
46
162
£40.1m
£983m
22
132
£14.1m
£188m
25
89
£22.7m
£190m
31
78
34
71
£78.3m
£339m
£47.3m
£83.3m
17
60
£61.9b
£154b
15
52
£0.74m
£87.6m
3
39
6.2 Number of deals and amount raised since 2011, by region
16
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
40
50
89
168
167
263
310
0
50
100
150
200
250
300
Fintech
Artificial Intelligence
Blockchain
Clean technology
Life sciences
Digital security
Crypto-currencies
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£0.48b
£0.68b
£0.08b
£6.57b
£0.40b
£2.50b
£1.38b
£1.54b
£0.13b
£2.17b
£0.11b
155
128
185
310
117
193
20
216
279
34
60
Several of the UK’s leading high-growth
sectors saw increased investor interest last
year. The life sciences sector continued to
see steady growth in deal numbers, while
companies operating in clean technology saw a
signifi cant rise, from 114 rounds in 2020 to 168
in 2021—a welcome development in the face
of the escalating climate crisis.
Fintech had an astonishing year, with 310
rounds worth a combined £6.57b—more
than two and a half times the amount raised
in 2020. Despite growth in crypto asset
markets, private investment into the space has
stagnated, at just 40 deals into cryptocurrency
companies and 50 into blockchain fi rms.
Sectors
7.1 Number of
deals since 2011,
by sector
7.2 Number of
deals and amount
invested into
fi ntech companies
since 2011
17
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
88%
83%
78%
78%
78%
78%
82%
82%
76%
76%
81%
13%
14%
16%
16%
16%
16%
17%
17%
11%
11%
6%
Male-founded
Mixed gender
Female founded
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
88%
88%
85%
83%
83%
89%
89%
86%
86%
95%
87%
15%
13%
14%
14%
10%
10%
10%
10%
8%
4%
7%
Male-founded
Mixed gender
Female founded
Companies with at least one female founder
secured 24% of equity rounds in 2021,
sustaining the record high achieved in 2020.
Meanwhile, companies that have been solely
founded by women secured 7% of deals.
In terms of the amount raised, the numbers
are less optimistic. Although the proportion
of pounds invested going to female-founded
businesses has improved since we fi rst started
collecting data in 2011, the fi gures fl uctuate
far more than with deal volume. That’s because
a handful of large deals can make a huge
difference to overall fi gures.
There were a record 15 megadeals secured by
businesses with a female founder in 2021—
more than three times the number secured
in 2020 (4). This includes Vaccitech’s £121m
round, Starling Bank’s £322m round, and
Beckley Psytech’s £58m round. Meanwhile,
there were far more megadeals secured by all-
male founding teams, despite only increasing
by two times in 2021—from 40 to 93.
Founder
genders
8.1 Proportion of
deals since 2011,
by gender of
founding team
8.2 Proportion
of amount raised
since 2011,
by gender of
founding team
18
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
200
400
600
800
1,000
1,200
1,400
Angel Network
University
Business Angel(s)
Corporate
Crowd funding
Private Equity and Venture Capital
52
240
296
573
602
1,359
All major fund types increased their
investment activity between 2020 and 2021.
Venture capital and private equity fi rms
gained further ground over other categories,
participating in 1,359 of the 2,679 rounds
announced (51%). Individual angels climbed to
second place, displacing crowdfunding to third.
As well as a genuine increase in angel activity,
this trend is likely compounded by a growing
desire for businesses to announce angel
participation in their equity rounds. We’re
seeing an increasing number of high-profi le,
high-net-worth individuals whose names add
further validation to a company’s cap table.
Investor
types
9.2 Number of
deals since 2011,
by investor type
SeedrsCrowdcubeScottish EnterpriseBritish Business BankSyndicateRoomSFC CapitalMercia Asset ManagementBGFParkwalk AdvisorsOctopus GroupMaven Capital PartnersAscension272
234
104
56
87
90
97
109
41
41
35
35
9.1 Most active
investors in
2021
19
The Deal 2021
Deal numbers
Amount raised
Crowdcube

234 deals

incl. 12 pre-emptions
Seedrs

272 deals

incl. 79 pre-emptions
Crowdcube

£198m raised

incl. £1.21m of pre-emptions
Seedrs

£126m raised

incl. £9.12m of pre-emptions
We tracked 573 deals that included
participation from the crowd in 2021, marking
an 18% uptick since 2020. Crowdfunding
remains an incredibly important part of the
UK’s early-stage funding market, with a
median round size of £490k in 2021. With that
said, the public is participating in larger and
larger equity rounds, with a record 15% of
deals last year worth more than £2m.
The largest round to have involved the crowd
in 2021 was PaySend’s £91m raise, which
included £167k of investment via Seedrs.
The UK’s leading platforms, Seedrs and
Crowdcube, were the country’s most active
facilitators of investment in 2021, with 272
deals (worth £126m) and 234 deals (worth
£198m), respectively.
The crowd
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
332
357
358
237
369
8
573
37
438
101
484
10.1 Number of
deals involving
crowdfunders
since 2011
10.2 Number of
deals and amount
raised in 2021,
by crowdfunding
platform
20
Year in Review
The Deal 2021
21
The Hedge
Fund-ification of
Venture Capital
ast year was a record for equity
investment in the UK, both in terms of
the total amount invested and the number of
deals. This increase in private market activity
was repeated around the world as economic
stimulus measures drove investors into riskier
assets. Amid the frenzied shovelling of cash
into private companies, some investors were
behaving in new and intriguing ways. It seems
that the traditional 10-year venture capital
fund lifecycle may finally be going out of
fashion. Beauhurst data can help shed light
on why this is happening and why venture
capitalists are facing more competition than
ever before for deals.
In the book “VC: An American History”, Harvard
Business School professor Tom Nicholas
locates the emergence of the venture capital
model in the approach to capital deployment
that came to prominence with the rise of the
American whaling industry in the 18th and 19th
centuries. While the following 100 years or so
saw the emergence of innovations such as the
limited partner structure, Nicholas notes that
the business model for venture capital has
proved to be remarkably stable over time:
“…if one asks how exactly VCs do what they do, it
is not clear that the answer today is much different
from half a century ago. The dominant form of
organization is still the limited partnership with
an ephemeral fund life, even though this places
constraints on the time scale of investment returns.
Although there have been some organizational
structure and strategy innovations, these have
been paradoxically rare in an industry that
finances radical change.”
Dan Robinson
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
8.7
6.5
8.2
9.5
10.5
9.6
7.9
9.8
9.9
7.5
6.9
7.1
6.7
6.6
7.4
5.1
8.8
5.4
7.7
8.1
Average company age, years
Median company age, years
22
The Deal 2021
Given the stability of the VC model through
time, it was big news in the industry when US
VC fi rm Sequoia Capital announced last year
that it was moving to a permanent structure. In
a Medium article announcing the shift, general
partner Roelof Botha highlighted that the
industry is stuck using a 10-year fund cycle
that is no longer fi t for purpose. Botha noted
that founders’ ambitions are not constrained to
a 10-year period, so neither should Sequoia’s.
Botha’s words echo those of Nicholas:
“Ironically, innovations in venture capital
havenʼt kept pace with the companies we serve.
Our industry is still beholden to a rigid 10-year
fund cycle pioneered in the 1970s. As chips shrank
and soft ware fl ew to the cloud, venture capital
kept operating on the business equivalent of
fl oppy disks. Once upon a time the 10-year fund
cycle made sense. But the assumptions itʼs based
on no longer hold true, curtailing meaningful
relationships prematurely and misaligning
companies and their investment partners.”
Beauhurst data over the last decade confi rms
that equity-backed companies in the UK
are taking longer to achieve an exit. Both
the mean and median number of years from
incorporation to exit for companies backed
by private equity and venture capital fi rms
have increased by around 50%. This shift
among UK startups could be part of a global
trend, causing the venture capital industry to
reevaluate its business model.
Why is the average time until exit increasing?
The increase in time to exit could be indicative
of longer commercialisation periods for
startups as the UK ecosystem matures.
Entrepreneurs have arguably solved many
of the easier problems that can be solved via
software or web-enabled business models.
Companies may, therefore, be taking longer to
achieve product-market fi t and reach the scale
and sustainability that make them attractive
acquisition targets or suitable IPO candidates.
Changing dynamics in capital markets could
also be playing a role as founders may be able
to tap increasingly large sums of capital while
keeping companies private and achieving a
level of liquidity without a full exit. For many
years we’ve noted the rise of megadeals—
rounds where the invested amount is equal to
or greater than £50m.
11.1 Average
time to exit from
incorporation of
fi rst deal since
2012
23
The Deal 2021
10 years ago, most companies could only hope
to access such sums via public markets, but
now megadeals are relatively commonplace,
with a record 112 completed in 2021.
With so much capital available, VCs are also
letting founders take chips off the table—
allowing them to release some of the value
of their shares via secondary transactions,
without an exit event.
We know, anecdotally, that the number of
secondaries occurring alongside primary
transactions is increasing, though the full
extent is still unknown due to diffi culties
separating the two in the data.
Both these factors—the increasing availability
of private capital and more options for
founder liquidity—could be increasing the
time until exit for equity-backed businesses.
It may be that the confl uence of these
factors with increasingly lengthy technology
and commercialisation cycles are causing
companies to require more time to exit,
pushing startup lifecycles beyond the
traditional 10-year timescales that most VCs—
and their limited partners—are familiar with.
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£13.2b
£4.83b
£4.93b
£0.54b
£6.28b
£0.96b
£2.50b
£3.27b
£1.28b
112
25
32
33
15
10
44
9
6
3
11.2 Number of
megadeals and
amount raised
since 2012
10 years ago, most companies
could only hope to access such
sums via public markets, but
now such deals are relatively
commonplace
24
The Deal 2021
Increasing competition
While the changing behaviour of companies
may be driving the reevaluation of the VC
model, another factor at play is the increase
in competition for equity stakes in private
businesses. The number of new entrants
providing equity finance to private UK
businesses has been on an upward trajectory
since Beauhurst started collecting data more
than a decade ago. In particular, the last
five years have seen over 500 new backers
become active in the UK market each year. This
gives founders far more options for securing
finance and means that VCs must compete
more aggressively with their peers and other
potential backers to win deals.
The emergence of super allocators like
SoftBank and Tiger Global makes more sense
in an increasingly competitive environment.
As Everett Randle, Principal at Founders Fund,
lays out in his popular article on Tiger Global,
the hedge fund has developed an attractive
offering based on speed of capital deployment,
high valuations, and light due diligence that
traditional VCs will struggle to match.
So, while hedge funds are acting a bit like VCs
to access startup returns, VCs are also starting
to act a bit more like hedge funds, to access
returns beyond the normal VC exit schedule.
Consider some of the changes accompanying
Sequoia’s new fund structure, as outlined by
Botha:
“As part of this change, we are also becoming a
registered investment adviser. This expands our
flexibility to support our portfolio companies
through various financing events, such as
secondaries or IPOs. It also enables us to further
increase our investments in emerging asset classes
such as cryptocurrencies and seed investing
programs.”
VCs are also starting to
act a bit more like hedge
funds, to access returns
beyond the normal VC
exit schedule
25
The Deal 2021
11.3 Number of funds investing in a UK business for the fi rst time since
2012
268
265
342
361
343
529
502
513
551
605
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
As a result of the changes at Sequoia, the fi rm
will be able to invest in other asset classes
beyond private equity and without defi ned exit
horizons. Becoming a registered investment
advisor with the US Securities and Exchange
Commission means that Sequoia will no
longer be bound by venture capital rules that
require it to keep 80% of its assets in private
companies. This step allows it to hold stakes
in listed portfolio companies over the longer
term. In effect, Sequoia has taken steps to
make itself more like a hedge fund.
In the UK, 2021 was a record year for IPOs
by equity-backed growth companies. High
valuations driven by the increased relevance
of tech during the pandemic, retail investor
activity, economic stimulus measures, and
changes to listing regulations have made
public markets more attractive to companies
and their backers. By shifting to more fl exible
structures, a new breed of VC fi rms will be able
to hold onto stakes in portfolio companies even
after they IPO. This could enable such VCs to
benefi t from signifi cant public market uplifts
in the value of portfolio companies that their
more traditional peers are unable to tap.
The competitive dynamics of venture capital
are changing—fi rms like Sequoia may be the
vanguard of a new type of VC investing. Many
VCs may soon be facing the same pressures as
the companies they fund: adapt or die
26
The Deal 2021
In 2021, the UK witnessed the highs and
lows of the COP26 UN Climate Change
Conference in Glasgow, a country-wide
energy crisis, and a spate of public protests
calling on the Government to take stronger
action against climate change. At the same
time, globally, H1 2021 saw record levels
(£48b+) of investment into clean technology1.
But what about in the UK, the world’s third
largest market for cleantech investment from
VCs, behind the US and China?
As politicians increasingly turn their attention
to green technology and its place in the global
climate agenda, so too have investors. We’re
seeing very positive signs of progress in the
Lucy Wilson
Cleantech
Investment Finds
Renewed Energy
27
The Deal 2021
UK market, as both the number and value of
announced equity deals secured by cleantech
companies continues to grow. This trajectory
has been particularly strong since 2018.
Whilst amount raised in the sector dropped
off slightly in 2020—in line with wider trends
amidst the COVID-19 pandemic—it has
massively rebounded since. Between 2020 and
2021, we saw an impressive 50% increase in
pounds deployed to the UK’s cleantech sector,
landing on £945m raised. Meanwhile, the
number of cleantech deals announced grew
from 114 to 168, marking a rise of 47%.
On both counts, Q4 2021 was the best quarter on
record for cleantech investment in the UK—an
impressive £455m was secured by companies in
the sector, across 47 equity rounds.
Startups see green across the country
With investors participating in more deals and
putting more money behind climate change
solutions than ever before, where in the UK is
this funding going?
One of the biggest startup success stories of
2021 was Britishvolt, the Northumberland-
based cleantech fi rm that designs and
manufactures sustainable lithium-ion batteries,
primarily for use in electric vehicles (EVs).
Founded by Swedish entrepreneur Orral Nadjari
and incorporated on the fi nal day of 2019,
Britishvolt surpassed the billion-dollar valuation
mark in August 2021. In doing so, it joined
Arrival and OVO in the herd of UK cleantech
unicorns, at less than two years old.
Meanwhile, seven cleantech companies
announced equity deals worth over £25m
in 2021. And, unlike the broader UK equity
market, the sector’s largest rounds were
not overwhelmingly London-centric.
Headquartered in Bristol, electric aviation fi rm
Vertical Aerospace raised £149m in October,
before listing on the NYSE via a SPAC merger
in December. Meanwhile, Essex-based Tevva
Motors secured £42.5m in November, to
accelerate production of its extended range
electric vehicles (EREVs) for customers by the
end of 2022.
Unlike the broader UK equity market,
the sector’s largest rounds were not
overwhelmingly London-centric
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£945m
£308m
£240m
£200m
£184m
£180m
£143m
£631m
£187m
£661m
£271m
168
88
80
99
100
69
67
67
114
62
55
12.1 Number of deals
and amount invested
into cleantech
companies since
2011
1. https://www.pwc.co.uk/issues/esg/the-pwc-net-zero-future50.html
28
The Deal 2021
5 biggest cleantech deals of 2021
£150m Flexion Energy
£42.5m Tevva Motors
£124m Plastic Energy
Flexion Energy develops and operates
large-scale energy storage infrastructure.
Tevva Motors produces extended range
electric vehicles (EREVs) for the urban
delivery market.
Plastic Energy develops chemical recycling
technology to turn end-of-life plastics into
feedstock.
£149m Vertical Aerospace
Vertical Aerospace develops electric
aviation technology for urban air travel.
£42.2m Intelligent
Growth Solutions
IGS develops IoT-enabled
vertical farming technology for
indoor agriculture.
Head offi ce location: London
Date of raise: July 2021
Participating funds:
GLIL Infrastructure
Head offi ce location:
East of England
Date of raise: November 2021
Participating funds: Undisclosed
Head offi ce location: London
Date of raise: November 2021
Participating funds: Axens,
LetterOne, M&G Investments
Head offi ce location: South West
Date of raise: October 2021
Participating funds:
American Airlines, Avolon,
Honeywell, Kouros, M12, Mudrick
Capital Management, Rolls-Royce
Head offi ce location: East of Scotland
Date of raise: November 2021
Participating funds: AgFunder, Cleveland
Avenue, COFRA, DC Thomson Ventures,
Ospraie Ag Science, S2G Ventures, Scottish
Enterprise and angel investors
29
The Deal 2021
Meanwhile, Scotland is also proving an
emerging hub for green innovation, currently
home to 11% of the UK’s high-growth cleantech
companies. According to The Scottish National
Investment Bank, “Scotland has long held
an international reputation for expertise in
the energy market, which means it is well-
positioned to develop innovative technologies in
the cleantech space.”
The Bank was set up in November 2020 to
address long-term challenges facing the
region, including supporting its transition to net
zero by 2045. The Bank explains that, “given
the increasing focus on developing solutions
to tackle climate change, and Scotland’s
potential role within that, cleantech is clearly
an area where we see huge potential”. It sees
the energy transition “as a clear economic
opportunity for Scotland, both in terms of the
domestic market and export potential for the
nation’s SMEs.”
Indeed, two of the biggest deals in cleantech
last year went to businesses based in the
region: Edinburgh-based urban farming
venture Intelligent Growth Solutions (£42.2m)
and Glasgow-based vegan protein producer
ENOUGH (£35.9m).
The crowd seeks climate action
Most of these big ticket deals saw participation
from foreign investors, primarily US and French
funds. But while foreign investors deployed the
most capital to cleantech companies in 2021,
the sector’s top funders by number of deals
were all UK-based. These include SFC Capital,
Turquoise International, The Scottish National
Investment Bank, Scottish Enterprise, and
Edinburgh-based Par Equity.
It was crowdfunding platforms, however,
that took the crown as cleantech’s most
active investors last year, with 23 announced
equity deals facilitated by Crowdcube, and
18 by Seedrs. According to Crowdcube’s Q4
2021 shareholder update, “as the climate
change conversation got louder through 2021,
particularly around COP26 in November, we
saw increasing demand for cleantech and
sustainability investments” from the crowd.2
Alongside climate change protests and strikes,
the public is now proactively coming together
to finance the next generation of green
technologies themselves.
The prevalence of crowdfunding, early-stage
investors and government funds in cleantech
funding is unsurprising given the relative
immaturity of the sector—35% of deals in 2021
went to companies operating at the seed stage,
and 48% to those at the venture stage, with
just 17% reserved for later-stage firms. Perhaps
less expected, however, is the lack of purpose-
driven funds in the ranks of top investors.
Indeed, what used to be a niche sector in
the UK, that predominantly attracted impact
investors, is now attracting more mainstream
funds. Cleantech is quickly becoming a priority
for regional funds, as well as those in the
energy, utilities and infrastructure space,
following the crowd in future-proofing their
investments.
The Scottish National Investment Bank
“expects cleantech investment to continue to
grow this year, as more institutional and private
investors see the opportunity in financing what
will likely be cornerstones of how business
operates in the future.” The Bank also notes
“seeing a build in momentum behind impact-
related reporting and disclosure which we
anticipate leading to more investors looking at
how they proactively manage their exposure to
impact-type risks.”
Meanwhile, Natasha Jones, Early-Stage Investor
at Octopus Ventures, tells us: “Over the next 30
years, every business, within every industry, will
need to transition to net zero carbon emissions.
Best estimates put the level of investment
needed to achieve this at $5-7 trillion. This
astonishing target will simply not happen
without entrepreneurs—and the investors
who back them—mobilising technology in
innovative ways. The VC community is waking
up to this huge opportunity.”
The public is now proactively
coming together to finance
the next generation of green
technologies themselves
2. https://www.crowdcube.com/explore/blog
crowdcube/crowdcube-q4-2021-shareholder-update
30
The Deal 2021
UK cleantechs fi nd their niche
According to Natasha, “with growing pressure
from consumers, governments and regulators,
all types of businesses are seeking ways to
reduce their emissions. In the UK, for example,
45% of the FTSE 100 have made some sort of
net zero pledge. However, research also shows
that only 16% have a strategy to realistically
meet their commitments. Carbon accounting
software providers are seen as the wedge to
engage businesses in their climate impact,
incentivise green behaviour and investment,
and provide meaningful pathways for
companies to achieve net zero.”
Carbon accounting, that is the quantifying and
tracking of greenhouse gas emissions, will no
doubt be central to global decarbonisation
efforts in 2022. So it’s no surprise that we’re
seeing a growing number of high-growth UK
companies in this space. One such company
is Pledge, which builds carbon tracking tools
for businesses seeking to measure, reduce
and offset carbon emissions across their
supply chains. Founded in March 2021 and
based in London, the seed-stage startup
secured its fi rst fundraising in October, worth
£3.27m, to roll out its B2B carbon tracking
software. Similar ventures that raised funding
in 2021 include carbon accounting platform
Emitwise and carbon removal subscription fi rm
Lowercarbon, plus Pawprint, which develops
a carbon tracking app focused on employee
engagement.
Companies like these are mostly directing their
tech towards business customers, addressing
organisational sustainability goals, such as ESG
targets, the cost of carbon, and stakeholder
engagement. But we’re also starting to see
more cleantech innovations targeted at the
individual, such as within the EV market, with
EV charging now carved out as an industry
vertical of its own.
For instance, both char.gy (in London) and
Forev (in Edinburgh) are developing charging
points for electric vehicles—char.gy raised
£6.4m from the government-backed Charging
Infrastructure Investment Fund in June 2021,
whilst Forev secured £2m from The Scottish
National Investment Bank in July. Then there’s
Bonnet, whose app enables drivers to fi nd
electric charging points. Bonnet secured
£950k in funding from APX, Ascension and
Imperial College Innovations Fund in August, to
expand its operations, chargepoint offering and
network partnerships.
Another area of cleantech capturing investor
interest is agritech, in which technology
is being developed to make farming more
effi cient and sustainable. Elemental is one
example, having developed tech to convert
food waste into fertiliser and food ingredients,
with the aim of reducing waste in the farming
industry and developing a sustainable circular
model. The company secured two deals with
31
The Deal 2021
Crowdcube last year, in March and July,
totalling £1.41m.
Likewise, crowd-backed Zero Carbon Food
raised £5.63m via two equity rounds of its own,
to further develop its controlled environment
farms. These carbon-neutral sites use
redundant underground spaces to produce
plants with LED lights and hydroponics (i.e. no
soil required). The company is also tapping into
several innovation grants, awarded to support
its vertical farming research and development.
A word on COP26
Despite increased government and VC
investment in cleantech, and all the innovative
technologies being developed, more
collaboration is needed to help limit global
warming to 1.5 degrees. In November last year,
COP26 brought together leaders, delegates
and media from around the world, culminating
in the signing of the Glasgow Climate Pact
by 197 countries. But alongside a number of
shortcomings, including the watering down of
emissions-cutting pledges from some of the
largest industrial nations, commentators also
noted the lack of startups at the conference.
COP26 saw tens of thousands gather to share
ideas and propose solutions to the climate
crisis. Outside of negotiations taking place
in the Blue Zone, to which only accredited
politicians, NGOs and activists had access,
public exhibitions and talks were held in the
Green Zone by organisations fortunate enough
to secure a spot—including cleantech startups.
But one wonders, without a seat at the table
(or a spot to stand in the VIP zone), how are
cleantech companies meant to help fi ght
the climate emergency? The lack of VC
presence and conversation around impact
investing at COP26 was equally alarming. As
a nation, we have the technology required
to accelerate change. The more funding our
cleantech startups can secure, the more likely
they’ll be to scale, attract new talent and
investors, displace environmentally unfriendly
incumbents, and be called on to advise on
future political decisions.
Where to next?
In his annual letter to CEOs this year,
BlackRock’s Larry Fink made clear that “the
tectonic shift towards sustainable investing
is still accelerating…The next 1,000 unicorns
won’t be search engines or social media
companies, they’ll be sustainable, scalable
innovators—startups that help the world
decarbonize and make the energy transition
affordable for all consumers.”3
So, whilst more work is needed to ensure
cleantech entrepreneurs get the backing and
infl uence they need to make a difference, we
have high hopes for 2022. Whether it’s vertical
farming or EREVs that become the next
big thing, we’re optimistic it will be another
stellar year for UK cleantech investment and
innovation
3. https://www.blackrock.com/corporate/
investor-relations/larry-fi nk-ceo-letter
32
Year in Review
The Deal 2021
Rolling the Dice
on Gamifi cation
Freya Hyde
33
The Deal 2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£359m
£882m
£308m
£452m
£183m
£418m
£184m
£81m
332
357
358
237
369
8
587
37
438
101
484
rom digital health technology to remote
working software, many industries have
rapidly expanded in the last two years, with
obvious links to the onset of the COVID-19
pandemic. Almost unheard of a decade
ago, one emerging sector (with ballooning
investment in 2021) is gamifi cation: the use of
gaming dynamics in non-game environments to
increase participation and engagement.
Certainly, the offerings of gamifi cation
companies are relevant to the altered ways in
which we live, work, socialise and take care
of our health, as a result of the pandemic, and
investors and grant-awarding bodies are fully
aware. Private companies operating in the
industry raised a combined £226m worth of
announced equity deals in 2021, compared to
£39.2m in 2020. But was COVID responsible
for investors’ signifi cantly increased interest in
gamifi cation, or was it due to happen anyway?
Gamifi cation since the pandemic
Health and fi tness app Magic Mountain
uses gamifi cation and group socialisation
to motivate users to reach their exercise
goals. Investors have backed the company in
unannounced deals worth £468k in August
2020 and £644k in April 2021—perhaps
conscious of its pandemic-related potential.
Previously in July 2020, Innovate UK granted
the company £74.9k to support its goal of
combatting sedentary living and feelings of
loneliness, exacerbated by COVID-19.
13.1 Number of deals
and amount invested
into gamifi cation
companies since 2011
34
The Deal 2021
When national lockdowns exacerbated the
country’s mental health crisis, startups
worked on innovations to improve quality of
life. Launched in May 2020, Thymia develops
mental health assessment and analysis
software that uses facial microexpressions,
speech patterns, and neuropsychology-
based video games. The seed-stage business
secured a £790k equity deal in June 2021
from Entrepreneur First, Form Ventures, Calm/
Storm Ventures, and Kodori AG.
Meanwhile, two gamification companies raised
equity deals of more than £50m in 2021. Both
firms have undergone significant growth since
the start of the pandemic. Yulife, a wellness-
led life insurance company, with an app that
rewards users for looking after their health,
secured £50.7m of equity funding in July.
The other megadeal went to digital security
firm Immersive Labs; it raised £53.5m in
equity funding from Goldman Sachs Asset
Management, Insight Partners, Menlo Ventures
and Citi Ventures in June. The sector has
experienced increased momentum since the
start of remote working. Aiming to engage
users and increase knowledge retention,
Immersive Labs gamifies cybersecurity
training with mechanics, such as through
experience points, rewards and leaderboards.
Pre-pandemic growth of gamification
Despite the seeming entanglement of
gamification to societal changes caused by
COVID-19, it’s likely the industry was always
set to rapidly expand over the 2020s. When
examining announced deals, the volume of
investment in the sector has been firmly on
the rise since the early 2010s. Equity funding
rocketed 682% between 2013 and 2017 (from
£6.6m to £51.6m), then a further 338% in 2021,
landing on £226m.
Between 2012 and 2021, 88.5% of equity deals
into gamification were secured by companies
in the seed or venture stage. The young and
high-potential nature of these businesses
suggest that gamification is still in its infancy.
Given gamification’s overlap with other high-
growth sectors like mobile apps, software-
as-a-service, analytics tools and edtech, a
year-on-year rise in the volume of investment
is to be expected, regardless of the additional
interest brought about by the pandemic.
Taking a chance of trading apps
Indeed, the application of gamification is
rapidly spreading. In recent years, trading
apps such as US-based Robinhood have
surged in popularity, making retail investing
an accessible hobby for the public. Not only
are these apps easy to use, their promise of
possible large financial gains, quick pace,
and highs after lows can make them highly
addictive, gamifying investing and incentivising
casual users to keep trading. This has led
to questions about the need for controls to
safeguard inexperienced investors.
In March 2021, trading platform Invstr raised
£14.4m from angels and funds Finberg and
Ventura Capital. In addition to buying real
shares, Invstr takes gamified investing one
step further, offering ‘Fantasy Finance’—a
virtual portfolio of investments where users
can compete against others in the style of a
fantasy sports league. Also operating in the
market is BullBear, a platform for investors
of any level of experience to practise trading,
which increases in complexity over time.
The business took an unannounced equity
investment of £146k in December 2019.
Meanwhile, Trad3r’s social trading app allows
users to trade various entities from companies
and sports teams to celebrities, with rewards
for more valuable trades. Trad3r secured
£1.20m from angels in October 2019.
Digital learning goes for gold
Gamification is also disrupting edtech, with
companies at the intersection of the two
sectors securing 66 announced equity deals
between 2012 and 2021. With increasing
engagement and absorption of content as
primary objectives for any edtech platform,
gamification is a natural fit for the industry.
As such a powerful
means to interact
with consumers, the
gamification industry
was set to explode in
any case
35
The Deal 2021
Though COVID-19 may have suddenly
increased demand for engaging remote
educational technology, investor interest in
gamified digital learning was already present.
Between 2012 and 2021, the three edtech
ventures that raised the most equity funding—
Hopster, Memrise and MarcoPolo—secured a
significant £43.9m between them.
2021 saw a number of gamification edtechs
secure further rounds to their existing
investments. Virti’s immersive training
facilities, helping professionals to prepare for
high-pressure events like surgery, emergency
response and military training, attracted a third
round in 2021 worth £7.21m, after initial raises
in 2018 and 2019. Meanwhile, Zzish, an edtech
offering a gamified learning experience called
Quizalize, among other educational software,
raised its 11th equity round in 2021—£926k
from Crowdcube.
Super marketing bros.
Gamification’s ability to increase engagement
with content makes marketing and customer
relationships another unsurprising industry in
which to see the phenomenon emerge. In 2021,
loyalty and engagement platform Loyalty Lion
raised £9m from Kennet Partners and other
investors, while gamified customer advocacy
programme developer Duel secured £463k
from the Minerva Business Angel Network
and SuperSeed. Using Duel, customers
are rewarded for tasks that increase brand
exposure, such as sharing branded posts on
social media.
The outlook: it’s all to play for
Overall, gamification has enormous potential
across a huge number of industries. Gamified
dynamics can increase a consumer’s time
spent engaged with a product and their
motivation to return to it, and even influence
their social behaviour and actions regarding
their health and lifestyle. Although the world
has spent even more time online in the last two
years due to COVID-19, the gamification uptick
is coincidental. As such a powerful means
to interact with consumers, the gamification
industry was set to explode in any case and
it’s likely to only continue emerging in new
offerings of the innovation ecosystem
36
The Deal 2021
A cross the high-growth ecosystem,
companies benefi ted from an
increased investor appetite for
funding in 2021. A handful of
industries, however, really thrived. These
emerging sectors are offering novel products
or services, at a time when their audiences
are well-positioned to engage, thus peaking
investor interest.
We heard from a selection of investors, as they
refl ected on the past year and the emerging
technologies that caught their attention the
most—all showcasing signifi cant growth over
the past 12 months.
The future of work
“2021 has solidifi ed the importance of looking
at the future of work”, Chris Smith at Playfair
Capital tells us, emphasising how businesses
in this high-potential space have garnered
interest from investors. The future of work
is a broad sector, referring to technologies
and services that reimagine the workplace,
ranging from video calling programmes to
employee wellbeing apps.
Although lockdown measures have been
eased in the UK, and the Government is
now encouraging a return to the offi ce, the
COVID-19 pandemic caused a shift in how
we think about working. The future of work
gained popularity as the concept of remote
working became mainstream, and companies
began recognising the potential benefi ts of
workplace fl exibility. For example, in March
2021, Spotify announced a work-from-
anywhere scheme, embracing the idea of an
international workforce. More recently, in
January 2022 several UK companies embarked
on a four-day working week trial monitored by
academics at the Universities of Cambridge
and Oxford.
Accompanying these changes was the
opportunity for new solutions to be developed
that help facilitate this shift and evolved
workforce, as businesses reorganise their
Emerging
Technologies
To Watch
in 2022
Alice Williams
(According to VCs)
37
The Deal 2021
operations. Companies building collaborative
tools raised £157m across 39 fundraising
rounds in the past year. Of specific interest
to Chris was the rise of companies embracing
a distributed workforce, and the technology
emerging to support this: “these technologies
have positive outcomes beyond enabling
remote working, they level the playing field
globally by allowing individuals living outside
the country to access career opportunities in
the UK.”

One exciting company aiding the move towards
a distributed workforce is Omnipresent,
which secured £11.6m in equity investment in
a January 2021 funding round with Playfair
Capital. The business provides outsourced
compliance, payroll, and benefits services
for international employees, simplifying the
administration process of managing people
remotely.
Meanwhile, when they launched in April
2020, Fit For Work was in the process of
developing AI technology that responded to
the challenges of remote working in high-risk
environments across the rail and construction
sectors. As the pandemic set in, the business
quickly broadened the scope of its technology
to provide software that improves the health,
safety, and wellbeing of employees in other
industries. The seed-stage company has
attracted £251k in equity investment since
making this transition, with its most recent
funding round (in December 2021) secured at a
pre-money valuation of £1.8m.
Investors have also been eager to back
companies working to improve workplace
communications. Element, for instance,
secured £21.7m worth of equity funding
in July 2021. The business develops an
encrypted messenger service that facilitates
collaborative working, with tools for file
sharing, private group discussions, and internal
or external messaging.

As companies continue to embrace flexible
working and more software emerges to
facilitate this transition, it’s likely that
investment into the sector will continue to
grow (regardless of the Government’s ever-
changing COVID-19 policies).
Middleware software
Speaking to Natasha Jones at Octopus
Ventures, she points to middleware software
as another emerging sector in the UK, of
particular interest to fintech investors. “These
players lower the barriers to innovation from
a technical perspective” she told us, and
“we are seeing players begin to innovate in
targeted sectors of the fintech stack”. The
rise in popularity of middleware software
corresponds with the growing complexity and
opportunity found within the broader tech
sector. By using middleware, companies are
able to purchase software in the form of an
API, that yields them functions without the
heavy lifting required to build these internally.
Recognising the burden of meeting data
compliance requirements and finding high-
quality developers to work internally, the
concept of outsourcing these functions
through integrations has gained traction with
many businesses. Indeed, companies building
middleware software attracted £140m of
equity investment in 2021, across 18 funding
rounds, with the industry maintaining its
momentum amidst the pandemic.
One area of middleware software that’s
seen particularly strong growth is banking-
as-a-service. This technology enables
fintechs to interact with banks, providing key
infrastructure for their growth. With offerings
such as account creation, payment processing,
wire transfers and bill payments, banking-
as-a-service has benefitted from—and to an
extent supported—the fintech boom that’s
currently taking place in the UK.

Businesses shaping the sector include Yapily,
which has built open banking infrastructure
that allows customers to connect with over
1,600 banks in Europe. This service delivers
The rise in popularity of
middleware software corresponds
with the growing complexity and
opportunity found within the
broader tech sector
38
The Deal 2021
a unifi ed payment
process across the
continent, providing
instant and fee-free
transactions. Also
working in the fi eld is
Integrated Finance—a
company backed by
Octopus Ventures—
which helps
companies streamline
their integrations into
a singular platform.
This offering aims to
replace the patchwork
of API offerings many
businesses navigate,
making managing
these programmes
cleaner and easier.
Looking to the future,
there are signs that
blockchain will be
the next industry
for middleware
software to tackle. In
comparison with the
7m Python and 12.4m
JavaScript developers
out there, globally, the
blockchain sector only has around 9k active
monthly developers right now. Drawing on
these fi gures, Natasha explains: “In this space,
the barriers to entry are higher, so I’m looking
closely at developer tools in blockchain that
can speed up adoption and the development of
new use cases with this technology”.
Artifi cial intelligence in the life
sciences space
Speaking to Edward Reid at PwC Raise, he
explains how “healthtech is, and will likely
remain, a hot sector for UK deal making
activity”. Investment into the life sciences
sector, generally, has gained considerable
momentum over the last decade, with
world-leading research taking place
in both commercial labs and academic
institutions across the country. Whilst the
rise in healthtech investment was somewhat
predictable even before the pandemic, with
emerging technologies in the highly-profi table
industry naturally drawing in investor attention,
COVID-19 has spurred further innovation in the
fi eld and highlighted the need for medicine to
become more digitised.
One technology that has solidifi ed itself in the
life sciences industry is artifi cial intelligence.
Michael Treskow, a Partner at Eight Roads
Ventures, explains how the mindset for
investors backing AI in the healthcare industry
has shifted. “10 years ago,” he explains, it “was
all ‘imagine a world’ type investment, and
nowadays there’s a product-market fi t.”1
And our data supports these conclusions,
with the value of fundraisings hosted by
companies working in the life sciences and
artifi cial intelligence crossover increasing by
310% between 2020 to 2021. Contributing
signifi cantly to this rise were three funding
rounds secured by Exscientia, a drug
development fi rm that uses AI to design and
test potential small molecule drugs, to discover
39
The Deal 2021
which molecules are most likely to make
successful drugs. Having raised £209m in 2021,
the business underwent an IPO in October,
listing with a market capitalisation of £226m.
Although artifi cial intelligence has a range
of uses in the life sciences sector, its most
prominent has been to expedite drug
discovery—a process that’s recognised as
traditionally being lengthy, risky, and expensive.
Large pharmaceutical fi rms have embraced
AI-powered technologies to streamline their
operations, reducing R&D costs. AstraZeneca,
for example, has successfully collaborated
with BenevolentAI on two occasions to discover
potential new treatments for Idiopathic
Pulmonary Fibrosis and chronic kidney disease.
BenevolentAI’s platform draws on artifi cial
intelligence and machine learning to provide a
mass analysis of scientifi c data. The company
has secured £253m of equity investment since
launching in 2014.
Beyond drug discovery, artifi cial intelligence
is also being applied to software aimed at
improving the workfl ow and effi ciency of
those working in the healthcare sector. ConcR,
for instance, creates modelling software to
identify and predict tumour progression,
responding to fi ndings in pre-clinical and
clinical trials. The seed-stage business
underwent two funding rounds in 2021, worth a
combined total of £745k.
With innovation ripe in both healthcare and
tech, and pharmaceutical fi rms looking to
challenge tradition, whilst cutting costs, we
expect the healthtech industry to continue its
growth into 2022.
The emerging sectors capturing VCs’
attention have successfully introduced new
technologies into existing fi elds, providing
innovative solutions to ongoing economic and
social challenges. Whether this is achieved
by creating software to connect and manage
workforces, introducing blockchain technology
to middleware, or merging pharmaceuticals
with artifi cial intelligence, the companies and
industries discussed in this piece will be ones
to watch over the next twelve months
Large pharmaceutical fi rms
have embraced AI-powered
technologies to streamline
their operations
1. https://sifted.eu/articles/ai-healthtech-owkin-benevolentai/
40
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42
The Deal 2021
Editor and Author
Hannah Skingle
Contributors
Henry Whorwood, Lucy Wilson, Dan Robinson,


Freya Hyde, Alice Williams
Design

Ella Halmari, Ben Hyde