www.penningtons.co.uk
A REPORT ON US INVESTMENT
INTO UK COMPANIES
FROM THE GOLDEN GATE
TO THE GOLDEN TRIANGLE
The companies at the epicentre of this are part of sprawling ecosystems
which include entrepreneurs, investors, evangelists and advisors.
Each of these, and many more, contribute something to the development
of the sector all working together to supercharge growth, turning
challenges into opportunities and opportunities into revenue.
As a law firm, we often act as a bridge between these key stakeholders
making connections and developing valuable relationships.
Penningtons Manches has a long history of working with technology
firms, their innovators and their investors. We have always had a
significant presence in tech hubs across London and the South East
and more recently, on the West Coast of the United States.
We opened our San Francisco office over three years ago in a bid to
better support our growing client base in the Bay Area and to develop
meaningful connections between our US clients and contacts and the
fast-growth tech companies in the UK that we represent.
Whether we're helping a promising UK company to find the support
it needs to scale, or enabling a US business to invest in some of the
UK and Europe's most exciting technology offerings, insight and
understanding are key.
That's why we're delighted to present this research, From the Golden
Gate to the Golden Triangle, our exploration of US investment into UK
companies. What we've found has been both illuminating and reassuring
at the same time.
It is heartening to see that West Coast investment into UK companies
is at an all-time high. Our research, carried out in partnership with
Beauhurst, has found there has been an impressive 252% increase in
the number of deals since 2011: we saw investors from the West Coast
involved in 74 deals in 2017, representing 1.08 billion in value.
Whether talking to US investors to understand what motivates them, or
hearing how UK companies expect investments to impact them, we have
sought to capture and create a clear picture of the inward investment
landscape something we continue to support to enable our clients
to scale.
THERE HAS NEVER BEEN A MORE EXCITING
TIME TO BE INVOLVED IN THE TECHNOLOGY
INDUSTRY AND ITS IMPRESSIVE PACE OF CHANGE.
WHETHER YOU'RE IN CAMBRIDGE OR CALIFORNIA,
INNOVATION CLUSTERS ACROSS THE GLOBE ARE
NURTURING GROUND-BREAKING TECHNOLOGIES
AND CREATING WORLD-LEADING BUSINESSES.
James Klein, partner
Penningtons Manches
Welcome from Penningtons Manches
BUILDING STRONG CONNECTIONS
A REPORT ON US INVESTMENT INTO UK COMPANIES | 3
06
EXECUTIVE SUMMARY
08
SILICON VALLEY SETS ITS
SIGHTS ON UK TECH
CHAPTER 1
10
A UK COMPANY MAKING
WAVES ON THE WEST COAST
CASE STUDY
12
A WIDER PICTURE OF
OVERSEAS INVESTMENT
CHAPTER 2
16
WHY DO UK COMPANIES LOOK
TO THE US FOR INVESTMENT?
CHAPTER 3
19
NURTURING THIS
VALUABLE NETWORK
CONCLUSION
CONTENTS
4 | A REPORT ON US INVESTMENT INTO UK COMPANIES
A REPORT ON US INVESTMENT INTO UK COMPANIES | 5
Cultivating and maintaining this relationship is
important there is so much to be gained for
everybody involved. The UK and Silicon Valley
are two of the world's leading places to start
and scale a technology business. London and the
surrounding technology clusters have grown to
become Europe's largest tech hub.
The Golden Triangle attracts some of the best
global talent, produces world-class research and
development and has a strong enterprise culture.
Early-stage capital and business advice are now
far more available than they were 10 years ago.
The result is that the number of UK start-ups is
now well above the European average. But there
is still so much we can learn from established
hubs in the States.
While we have had some success in creating world-
beating technology firms, we still lag behind other
countries when it comes to ensuring our swathe of
start-ups become strong and growing businesses.
If we are to reap the rewards of this entrepreneurial
revolution in terms of employment and national
prosperity, it is critical a good number develop into
thriving companies.
For the UK to produce these technology giants it
needs the investment required to scale fast-growth
businesses. US investors can help plug this gap.
It's fantastic to see that funders from the United
States made up 25% of total equity investment
into UK companies last year. This will no doubt
continue to rise over the coming years as the
Golden Triangle gathers even more momentum
and a larger profile in the States.
If companies can successfully attract investment
from the US, they'll garner much more than
capital. They'll tap into a wealth of experience and
advice which will help them navigate the whirlwind
of growth.
Valley investors have been around the block
with start-ups and scale-ups, they know what
challenges a company faces long before it does.
From building internal leadership capacity
and processes to attracting the right talent
and winning contracts at home and overseas
investors can provide invaluable support and
access to a wider ecosystem.
Creating closer ties between Silicon Valley and
the UK has been a personal mission of mine.
When these two hubs meet, great things happen.
It's fantastic to see so many invaluable ties being
created and delivering meaningful results. Golden
Gate, Golden Triangle is more than a phrase, it's a
powerful combination and I look forward to
seeing it flourish.
BRITAIN'S GOLDEN TRIANGLE IS A POWERHOUSE OF INGENUITY AND
INNOVATION. THE COMPANIES LOCATED IN AND AROUND CAMBRIDGE,
OXFORD AND LONDON GO TOE-TO-TOE WITH SOME OF THE BEST IN
THE WORLD AND IT'S NOT SURPRISING TO SEE THAT INVESTORS
IN SILICON VALLEY, AND ACROSS THE US, ARE PAYING CLOSE ATTENTION
TO THE ENTREPRENEURIAL ACTIVITY ON THIS SIDE OF THE POND.
Sherry Coutu CBE, serial
entrepreneur, investor and
co-founder of Silicon Valley
Comes to the UK
Foreword from Sherry Coutu CBE
GREAT THINGS HAPPEN WHEN
TECH HUBS MEET
6 | A REPORT ON US INVESTMENT INTO UK COMPANIES
THE UK COULD BE ENTERING
A GOLDEN AGE OF SILICON VALLEY
INVESTMENT. WE'RE SEEING MORE
DEALS INVOLVING WEST COAST
INVESTORS AND UK COMPANIES
THAN EVER BEFORE, AS INVESTORS
AND ACQUIRERS IN THE US LOOK
FURTHER AFIELD TO FIND THE
NEXT BILLION DOLLAR COMPANIES
AND, IN DOING SO, SPREAD THEIR
RISK PROFILE.
Our research suggests companies in the UK's
Golden Triangle are taking the lion's share of this
investment, particularly those in the software
sector, which have benefited from 2.2 billion in
funds since 2011.
Whilst West Coast investors were involved in more
deals, East Coast investors put more money into
UK companies overall evidencing that, whilst
Silicon Valley has its eye on the UK, tech hubs in
the likes of New York and Boston do as well.
We're seeing this as part of a wider trend of inward
investment into UK companies. It would appear
that Brexit has done little to put investors off and
as long as the UK continues to attract the world's
best talent, the flow of capital from the US looks set
to continue over the coming years.
EXECUTIVE SUMMARY
GOLDEN GATE MEETS THE GOLDEN TRIANGLE
1.08
BILLION
THE AMOUNT INVESTED INTO UK COMPANIES
BY WEST COAST INVESTORS IN 2017
NUMBER OF DEALS
INVOLVING WEST
COAST INVESTORS
AND UK COMPANIES
IN 2017:
THE AMOUNT INVESTED BY WEST COAST INVESTORS
INTO UK SOFTWARE COMPANIES SINCE 2011
2.2
BILLION
THE INCREASE IN THE
NUMBER OF DEALS BETWEEN
SILICON VALLEY AND UK
COMPANIES SINCE 2011:
252%
GREENOAKS CAPITAL
MANAGEMENT:
THE TOP US HEADQUARTERED
INVESTOR BY TOTAL VALUE OF
DEALS PARTICIPATED IN
EIGHT
THE NUMBER OF DEALS
INVOLVING 500 STARTUPS AND
UK-BASED COMPANIES IN 2017
500 STARTUPS THE US HEADQUARTERED INVESTMENT FIRM INVOLVED IN
THE MOST DEALS WITH UK COMPANIES IN 2017
WIDER US AND GLOBAL INVESTMENT TREND
62%
OVERALL INCREASE IN OVERSEAS
INVESTMENT INTO UK COMPANIES IN 2017
1.31
BILLION
AMOUNT INVESTED BY EAST
COAST INVESTORS INTO UK
BUSINESSES IN 2017
33%
OF DEALS BY VALUE INVOLVED
A NORTH AMERICAN INVESTOR
25% INVOLVED A US INVESTOR
2.83
BILLION
AMOUNT CONTRIBUTED
BY DEALS INVOLVING NORTH
AMERICAN INVESTORS
373
EQUITY INVESTMENTS INVOLVING
OVERSEAS INVESTORS IN TOTAL IN 2017
A REPORT ON US INVESTMENT INTO UK COMPANIES | 7
Silicon Valley investment into UK tech is at an all-
time high. Our research has found that the number
of deals involving West Coast investors and UK
companies has increased by 252% since 2011. Last
year, West Coast investors were involved in 74
deals with UK companies, totalling 1.08 billion and
representing 4.8% of all UK investments in 2017,
up from 59 deals the previous year and 21 in 2011.
"The UK is the top European destination for talent
and capital, creating a powerful ecosystem of
technology companies and this hasn't escaped
investors in the Valley and San Francisco that are
always looking for the next big thing," says Russ
Shaw, founder, Tech London Advocates and Global
Tech Advocates.
Unsurprisingly, it is the UK's software companies
that have had the most investment from Silicon
Valley and San Francisco-based investment firms.
Since 2011, West Coast investors have put 2.2
billion into software companies. Life sciences
companies were the second most invested in,
taking 472 million, with hardware companies and
medical tech following with 207 million and
101 million respectively.
"These figures back up what we've seen and what
we continue to see first-hand whilst on the ground
in the Bay Area," says James Klein, partner,
Penningtons Manches.
"Over recent years we have noticed an increase in
the levels of US interest and investment in the UK,
which has a particularly strong footprint in finance,
retail and the creative industries. This has fuelled
the start-up space and produced many scalable
and investable companies."
Silicon Valley-based firm 500 Startups was the
most prolific US investor in terms of deals done,
making eight investments into UK companies in
2017. "Great companies come from everywhere so
it's important to get out of the Valley," says Matt
Lerner, partner at 500 Startups. "The UK has an
abundance of talent, lots of companies accessing
global markets - or Europe at a minimum - and its
fintech and health tech innovation is ahead of
the Valley."
500 Startups, which counts UK-based Airbnb
management service, Airsorted and content
monetisation platform Skimlinks among its
portfolio companies, is followed by Partech
Ventures, which made six investments into UK-
based companies in 2017 and GV (formerly
Google Ventures) which made five.
West Coast investors are looking beyond the Valley
for a number of reasons but at the core is an
understanding that technology is global and great
ideas can be found anywhere. "Entrepreneurial
talent and intellect is distributed evenly globally,"
says Josh Manchester, partner at US-based
Champion Hills Labs. "You can find the right teams
anywhere outside the US."
There are also a number of beneficial factors which
draw US investors to the UK. "Common language is
a huge benefit," continues Josh. "A lot of European
talent comes to the UK and the university and hard
science talent is very attractive."
8 | A REPORT ON US INVESTMENT INTO UK COMPANIES
01
SILICON VALLEY SETS
ITS SIGHTS ON UK TECH
CHAPTER
WHAT DOES THE
UK HAVE THAT
US INVESTORS ARE
INTERESTED IN
(as cited by US investors
in our interviews)
TECHNOLOGY TALENT
1
INVESTABLE HARD SCIENCE
2
STRONG INTELLECTUAL PROPERTY
3
A COMMON LANGUAGE
4
LOWER VALUATIONS
5
21
2011
20
2013
56
2015
36
2012
46
2014
74
2017
59
2016
NUMBER OF DEALS
YEAR
WEST COAST DEALS BY YEAR
TOTAL VALUE
SECTOR
WEST COAST DEALS BY VALUE 2011 2017
2,198M
SOFTWARE
207M
HARDWARE
58M
CLEAN TECH
472M
LIFE SCIENCE
101M
MEDICAL TECH
A REPORT ON US INVESTMENT INTO UK COMPANIES | 9
with an online platform to carry out background checks and screening.
d in Oxford by three Oxford University graduates.
sing
20k fundraising
$4.5m fundraising
F
2015
F
2013
CrunchFund
ered
470k valuation
n San Francisco
2017
F
$30m fundraising
Microsoft Ventures
Salesforce Ventures
ONFIDO PROVIDES EMPLOYERS WITH AN ONLINE PLATFORM TO CARRY
OUT BACKGROUND CHECKS AND SCREENING. THE COMPANY WAS
FOUNDED IN OXFORD BY THREE OXFORD UNIVERSITY GRADUATES.
COMPANY REGISTERED
CRUNCHFUND
MICROSOFT VENTURES
SALESFORCE VENTURES
$25M FUNDRAISING
$30M FUNDRAISING
20K FUNDRAISING
470K VALUATION
$4.5M FUNDRAISING
CRUNCHFUND
OPENED OFFICE IN SAN FRANCISCO
R
F
F
F
F
O
10 | A REPORT ON US INVESTMENT INTO UK COMPANIES
A UK COMPANY MAKING WAVES
ON THE WEST COAST
CASE STUDY
ONFIDO
A REPORT ON US INVESTMENT INTO UK COMPANIES | 11
"Onfido is a great Oxford success story
that has now become a global business
with offices in London, San Francisco
and New Delhi. Two of the founders met
at the university's Oxford Entrepreneurs
society and they secured seed funding
from Oxford University's Sad Business
School.
"From these modest beginnings
Onfido has grown to be a very exciting
company in the artificial intelligence
space. It has now received over
$60 million in funding from flagship
investors including Microsoft Ventures,
Salesforce Ventures and Crunchfund."
Onfido founders Ruhul Amin, Husayn Kassai and Eamon Jubbawy
UK UNIVERSITIES
ARE GENERATING
WORLD-BEATING
INNOVATION
Will Axtell, partner,
Penningtons Manches.
Strong Silicon Valley investment into UK companies
is part of a wider investment story which sees
increases across the board. Our research has found
that 2017 was a record year for levels of overseas
investment into companies located in the UK, with
373 equity investments involving at least one fund
headquartered abroad a 62% increase on 2016.
It's not just the number of deals that has experienced
a rise, but also the value of these deals. Investors
from outside the UK were involved in 5.9 billion
worth of deals, a 187% rise on the previous year
and eight times as much as the figure from 2011.
"Despite the threat of Brexit, the UK remains a
safe bet for investors," says Russ Shaw. "Home to
some of the world's best universities and a strong
supporter of innovation, it has capitalised on its
strengths to become a world leader in science
and technology and this is clearly finding
recognition among overseas investors."
Investors across Europe, Asia and the rest of the
world have certainly played a part in this increase
in deals, but North America was the most significant
source of overseas investment for UK companies
in 2017.
Of the 8.27 billion worth of investments announced
in 2017, 33% or 2.83 billion was contributed by
deals involving at least one investor based in North
America. 2.15 billion of this total involved US
investors, representing 25% of all equity investment
into UK companies in 2017. 20% or 1.7 billion
involved investors based in Europe (excluding
the UK).
FOREIGN INVESTMENT LEVELS
AMOUNT INVESTED
NUMBER OF INVESTMENTS
736M
93
134
149
186
213
230
373
1,036M
814M
1,403M
2,074M
2,048M
5,874M
12 | A REPORT ON US INVESTMENT INTO UK COMPANIES
02
CHAPTER
A WIDER PICTURE OF
OVERSEAS INVESTMENT
2011
2012
2013
2014
2015
2016
2017
East Coast investment is also at an all-time high
West Coast investors may have been involved in
more deals, but East Coast investors have provided
more capital. They invested 1.31 billion into UK
companies in 2017.
The relationship between UK businesses and
investors in the likes of New York and Boston is
certainly getting stronger. Between 2011 and 2017,
the total number of deals by East Coast investors
into UK companies rose by 48% from 29 to 56.
These deals represented 3.8% of all UK investment
deals in 2017.
"New York can often be a convenient stopping off
point for companies on their way to the West Coast
or the rest of the US," says Brent Ahrens, partner
at Canaan Partners. "For example, onefinestay
expanded from London to Paris and New York
before moving to the rest of the US."
West Coast investors put more capital into software
companies than their East Coast peers, who
invested 1.95 billion in the period between 2011
and 2017, but East Coast investors were more
prolific in their support of life sciences, providing
46% (769 million) of all capital invested by the US
into this sector of UK tech. Hardware tech (313
million), materials tech (188 million) and medical
tech (144 million) followed.
With Boston's strength in life sciences, it follows
that investors based there have a keen interest in
these kinds of companies, largely based around
the UK's Cambridge and Oxford areas. It's also
interesting to note that whilst East Coast investors
did deals in the materials and nanotechnology
sectors, those on the West Coast did not.
56
49
62
39
39
29
38
2011
2013
2015
2012
2014
2017
2016
NUMBER OF DEALS
YEAR
EAST COAST DEALS BY YEAR
A REPORT ON US INVESTMENT INTO UK COMPANIES | 13
US INVESTMENT BY COMPANY SECTOR (VALUE, 2011 TO 2017)
TOTAL VALUE
SECTOR
1,948M
2,198M
340M
SOFTWARE
769M
472M
442M
LIFE SCIENCE
313M
207M
36M
10M
23M
15M
HARDWARE
144M
101M
58M
108M
9M
MEDICAL TECH
CLEAN TECH
NANOTECH
188M
MATERIALS TECH
EAST COAST
WEST COAST
REST OF US
COMPANY SIZE AT TIME OF
FUNDRAISINGS
(UK COMPANIES 2011-2017)
NON-US
DEALS
34%
20%
47%
US
DEALS
42%
41%
17%
SEED
VENTURE
GROWTH
14 | A REPORT ON US INVESTMENT INTO UK COMPANIES
US INVESTORS EQUALLY
INTERESTED IN GROWTH AND
VENTURE-STAGE COMPANIES
The overall investment by US firms into UK
companies illustrates a split in preference between
those at venture-stage and at growth-stage.
Almost half (42%) and (41%) went to companies at
venture and growth-stage, with only 17% going to
seed-stage companies.
A similar story is evidenced with Asian investors,
with 37% of deals involving at least one Asian
investor going to companies at the growth-stage.
"Oxford Nanopore's recent 100 million investment
from investors in the Asia-Pacific region is a great
example of this in action," says Will Axtell, partner,
Penningtons Manches. "The funding round valued
the fast-growing biotechnology company at 1.5
billion."
Deals involving US investors tend to be large:
the average value in 2017 was 18.2 million. So it
makes sense that the majority of US investment
is going to companies at a later stage, which are
likely to be seeking larger amounts.
The UK's Golden Triangle in the spotlight
The Golden Triangle the cluster formed by
London, Oxford and Cambridge plays host to
the majority of the UK's most innovative tech
companies. It is no surprise that this geography has
been of most interest to US investors, keen to back
UK ingenuity.
Our research has found that between 2011 and
2017, 79% of all US investment into UK companies
went to the those in the Golden Triangle. In 2017,
companies in this geography received record
levels of capital from US investors, with 2.1 billion
flowing into companies there a 64% increase on
the year before.
"The UK is home to some amazing innovations,
particularly in the tech and life sciences spaces,"
says Ross McNaughton, partner, Penningtons
Manches. "Many of those emerging growth
companies have their eye on the US as a place to
expand, and taking US investment is a natural step
to help achieve those goals."
One of the trends we are seeing which contributed
to this sizable increase, is the rise in deals worth
50 million or more. 2017 saw US investors
involved in 10 of these contributing 1.14 billion
in funds for businesses in the Golden Triangle.
The average value of these individual deals was
113.8 million.
Surprisingly, this average is 29 million less than
the global average of the larger deals into UK
companies, suggesting that the biggest deals are
actually being done by investors outside the US.
There were 29 deals worth 50 million and over
with Golden Triangle companies in 2017, meaning
that just over a third came from US investors.
521M
34
60
54
79
100
99
114
359M
400M
933M
1,316M
1,338M
2,164M
US INVESTMENT INTO
THE GOLDEN TRIANGLE
OVER TIME
AMOUNT INVESTED
NUMBER OF INVESTMENTS
2011
2012
2013
2014
2015
2016
2017
A REPORT ON US INVESTMENT INTO UK COMPANIES | 15
We've seen that US investment into UK companies
is on the rise and we've explored some of the
reasons why firms in the US are interested in the
technology coming out of the Golden Triangle.
We also wanted to look into some of the reasons
that companies in London, Oxford and Cambridge
are keen to do deals with US investors and how
they believe such transactions might be affected in
the future.
Gaining greater access to US markets looks to be
the largest driver for UK businesses without any
existing US backers. In fact, 83% of non US-backed
companies that we surveyed cited access to
markets as a reason to take US investment.
Access to the US market was followed by technical
expertise of the investor (46%) and favourable
investment climate (44%) by those without existing
US investment.
For those UK companies that have already done
deals with US-based firms, their primary driver for
taking additional US investment was an existing
relationship with the investor 48% cited this as
a reason, suggesting that once a relationship has
been formed, it can lead to further investment at a
later date.
Similar to those without any US investment,
access to US markets (35%), technical expertise
of investors (28%) and a favourable investment
climate (25%) were the second, third and fourth
largest drivers to seek further US investment.
16 | A REPORT ON US INVESTMENT INTO UK COMPANIES
03
CHAPTER
WHY DO UK COMPANIES LOOK TO
THE US FOR INVESTMENT?
US-BACKED COMPANIES
48%
35%
28%
25%
20%
13%
Existing relationship with investor
Access to US markets
Technical expertise of investor
Favourable investment climate for the investor
Other
Existing business operations in the US
NON US-BACKED COMPANIES
83%
46%
44%
7%
22%
Access to US markets
Technical expertise of investor
Favourable investment climate for the investor
Other
Existing business operations in the US
A REPORT ON US INVESTMENT INTO UK COMPANIES | 17
Has the exchange rate had an effect on
investment?
The devaluation of the pound has reportedly
created a surge in British exports since the Brexit
vote almost two years ago, but do UK companies
think this has affected their ability to attract
investment from the US? According to our survey,
generally, the companies which have raised smaller
amounts believe devaluation has had a beneficial
effect.
All (100%) of the companies surveyed that have
raised between 100,000 and 500,000 believe
currency fluctuations have been beneficial. This
drops down to 67% for those that have raised
between 500,000 - 1 million, down to 42% for
those in the 1 million - 5 million bracket and
keeps going down. The only outlier here is that a
minority (33%) of companies that have raised the
smallest amount surveyed, less than 100,000,
believe fluctuations have been beneficial.
We assume that companies that have raised
smaller amounts over time are seeking smaller
rounds of investment. This suggests that investors
contributing smaller amounts are more sensitive
to currency fluctuations and therefore need
favourable exchange rates to make the transactions
worthwhile.
"Currency fluctuations play a minor role in
motivating investors at the early-stage. You
don't want to take a 20% haircut," says Brent
Ahrens, partner at Canaan Partners. "Later-stage
companies can hedge. But overall, if the opportunity
is good, you get in when you can."
Have political events had an impact on investment
from the US?
From the Brexit vote, to President Trump's election
and the UK government's performance in the 2017
election, we wanted to see if UK companies felt
that notable political events had an impact on their
ability to attract US investment.
Overall, not many companies feel these events have
made US investors more likely to do deals. The
majority are split between thinking political events
have had no effect and thinking political events
have made investors less likely to do deals.
Over half (54%) of UK companies felt the 2017 UK
general election result had no impact on investor
decisions, 45% however, felt it had made them
less likely to invest. The Brexit vote had a similar
breakdown, with 46% of companies feeling the
prospect of the UK leaving the EU had no effect
and 45% believing it had put US investors off.
"Brexit hasn't had a huge impact," says Suranga
Chandratillake, partner at Balderton Capital. "The
ability to hire people is a concern because these
companies are all about people but it's too early
to tell if this will be impacted."
POLITICAL EVENTS
What effect do you think the prospect of the UK
leaving the European Union has had on US investors
looking to invest in the UK?
It has made them more likely to invest
It has made them less likely to invest
It has not had an impact
ALL UK
46%
9%
45%
CURRENCY FLUCTUATIONS
Have you found currency fluctuations beneficial to raising
investment from US investors?
Total amount raised by company throughout its lifetime
No
Yes
67%33%<100K100K-500K500K-1M1M-5M5M-10M10M-50M67%42%33%30%100%33%58%67%70%
18 | A REPORT ON US INVESTMENT INTO UK COMPANIES
IT IS CLEAR THAT UK COMPANIES,
PARTICULARLY THOSE BASED IN
THE GOLDEN TRIANGLE, ARE
BENEFITING FROM A SIGNIFICANT
INCREASE IN INVESTMENT FROM
SILICON VALLEY AND THE WEST
COAST OF THE US.
As home to the world's number one technology
hub, the West Coast has a wealth of world-leading
companies but also an established ecosystem of
investors, many of whom are keen to look beyond
their local area and find fast-growth companies
here in the UK.
It's heartening to see a similar story between
East Coast investors and UK companies. Last
year surpassed expectations and became a record
breaking year in terms of overall inward investment
for the UK.
We see no reason for this to slow down any
time soon. The UK is brimming with innovation,
particularly in sectors such as augmented and
virtual reality, artificial intelligence and fintech. As
more relationships between US investors and the
Golden Triangle are developed and the number of
scalable businesses increases, this will likely lead
to further deals and we expect to see even more
activity over the next five years.
The UK's rich talent pool has been cited by US
investors as one of the primary reasons they are
attracted to invest in the Golden Triangle. With this
in mind, we absolutely must ensure that the UK's
ability to welcome global talent continues as the
country transitions to life outside of the EU. Along
with talent, our strength in developing investable
hard science and our protected intellectual property
landscape are also assets that we must continue
to nurture.
No one can say what the future holds, but it is
our mission to continue bridging the gap between
high-growth UK companies and the US investors
looking to support them. We understand the power
of connections and we have worked hard to create
valuable relationships with investors and innovative
businesses on both sides of the Atlantic.
So whether we're helping British businesses to
speak the right language to attract US investors,
or making the powerful introductions between our
US and UK clients, we're in a fantastic position to
support this burgeoning network and look forward
to seeing this boom in investment continue.
A REPORT ON US INVESTMENT INTO UK COMPANIES | 19
Conclusion
NURTURING THIS
VALUABLE NETWORK
ABOUT THIS REPORT
DATA
This report has been written using data collected
and created by Beauhurst. Penningtons Manches
commissioned Beauhurst to provide a reference
of facts and figures on the levels of US investment
into businesses in the UK.
Beauhurst's proprietary sector and stage
classifications are explained below. For further
information on these classifications or any of the
data that underlies this report, contact Beauhurst.
Data for this report was finalised on 31 January
2018.
GLOSSARY
Seed: an early-stage company, generally pre-
revenue, that has received a small amount
of investment.
Venture: a company with a more developed
proposition, generating revenue but usually pre-
profit, that has received considerable investment,
usually from funds/organised investors.
Growth: a company with an established product,
generating revenue and usually profitable
(even if re-investing that profit), that has received
considerable investment from multiple types
of investor.
REPORT METHODOLOGY
This report looks at the equity investment received
by companies located in the United Kingdom.
Company stage: Beauhurst categorises companies
into six stages of evolution (seed, venture, growth,
zombie, exited, dead) using over 40 proprietary
criteria, which vary based on the complexity of the
intellectual property the company is developing.
For example, Beauhurst uses different criteria to
evaluate a pharmaceutical company than for a
software company. No one criterion is enough to
determine stage of evolution, so we take a balanced
view with each decision. Rarely, a company may
skip a stage, going from seed to growth, depending
on how it is doing.
Company sector: Beauhurst tags companies with
as many sectors from their proprietary sector matrix
as appropriate, but does not order or prioritise the
sectors attached to a company. The top-level sectors
in the matrix are: agriculture, forestry and fishing;
energy; leisure and entertainment; retail; technology/
IP-based businesses; telecommunications service;
tradespeople; transportation operators; built
environment and infrastructure; business and
professional services; craft industries; industrials;
media; personal services; supply chain; and other.
Equity investment: Beauhurst monitors thousands
of sources to find announced equity investments,
which is often the most timely declaration of a
deal. More than 50% of deals, however, are not
announced. To find these deals we look at SH01s
(a share allotment form) filed at Companies House.
We also use these SH01s to calculate a company's
pre- and post-money valuations.
Investors: We attribute equity investments to
however many investors were involved in the deal
provided they received new shares, regardless
of the number or value of shares received.
Investor nationalities are determined using head
office locations.
20 | A REPORT ON US INVESTMENT INTO UK COMPANIES
ABOUT BEAUHURST
Beauhurst is a searchable database of the UK's
high-growth companies and their investors.
Our platform is trusted by thousands of
professionals to help them find, research and
monitor the most ambitious businesses in
Britain. We collect data on every company that
meets our unique criteria of high-growth: from
equity-backed start-ups to accelerator attendees,
academic spinouts and fast-growing scale-ups.
This data is used by our clients at organisations
including law firms, technology transfer offices,
university enterprise education departments,
venture capital firms, corporate finance houses,
LEPs, growth hubs and many more.
Our data is also used by journalists and researchers
who seek to understand the high-growth economy,
and it powers studies by major organisations
including the British Business Bank, HM Treasury,
Innovate UK, and the ScaleUp Institute to help
them develop effective policy. We often work with
organisations to help them use and analyse our
data and to produce bespoke reports that answer
their specific research questions.
We believe good data is the key to making better
investments, faster decisions and more effective
interventions. With the right data we can help
support the UK's world-leading entrepreneurial
ecosystem and help more companies start up and
scale up.
For more information and a free demonstration
of the platform, visit beauhurst.com
CONTRIBUTORS
Henry Whorwood
Ella Halmari
Jake Ford
A REPORT ON US INVESTMENT INTO UK COMPANIES | 21
22 | A REPORT ON US INVESTMENT INTO UK COMPANIES
ABOUT PENNINGTONS MANCHES
Penningtons Manches LLP is one of the UK's
leading law firms, with seven offices including a
City of London headquarters and a presence in
San Francisco. With over 100 partners and some
600 members of staff, we are acknowledged as
a dynamic and forward-thinking practice which
combines comprehensive legal services with a
responsive and flexible approach.
We have a broad international focus supported by
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They are an extremely competent and
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Chambers UK 2018 edition
Particularly stands out for its strength
in complex and high-value transactional
matters. Acts for an impressive array
of national and international clients.
Chambers UK 2018 edition
FIND OUT MORE
For further information, visit us at www.penningtons.co.uk where you will find comprehensive
contact details for all our lawyers as well as our latest news, insights and publications.
Alternatively, e-mail us at info@penningtons.co.uk
Penningtons Manches LLP is a limited liability partnership registered in England and Wales
with registered number OC311575. San Francisco is an office of Penningtons Manches (California) LLP,
a California registered limited liability partnership with number 202016025001.
www.penningtons.co.uk
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