Corporate VCs have South West innovators in their sights says KPMG

Graphcore
Businesses in the South attracted £808k in Corporate Venture Capital (CVC) investment in Q3 of 2021, according to KPMG UK’s Global Venture Pulse Survey.
The capital was raised across 73 deals in the region, representing 10% of all UK deals by volume during the quarter, and 9% of all UK deal value.
 
Kay Drury, Transaction Services Partner at KPMG in the South West, said: “It has been encouraging to see the strong investment in the region over the last few months, despite ongoing tailwinds as a result of the pandemic. Businesses in our region are continuing to show international investors why the UK, and the South in particular, is such a valuable place to invest.”
 
Among the significant investments in the South West this year is Bristol-based Artificial Intelligence and Machine Learning accelerator company, Graphcore, which secured £162m in a funding round led by Baillie Gifford.
 
Graphcore is using the funding to support its expansion both globally and into new markets, such as voice recognition and driverless cars.
The KPMG survey found that there was a record high of over £6.5 billion invested by Venture Capital (VC) in UK scaleups over the summer.
 
After two extraordinarily high quarters in 2021, UK scaleups continued to attract funding from across the globe in Q3 21, with eager investors prepared to pay premium prices for strong UK innovators with a proven track record. Nearly £20 billion of VC investment has been raised so far this year by scaleups in the UK.
 
While fintech was the hottest area of investment in the UK, a diversity of other companies also attracted funding – such as virtual event platform Hopin (£330 million), electric vehicle subscription service Onto (£175 million), and flower delivery service Bloom & Wild (£125 million).
 
Bina Mehta, Chair of KPMG UK and Head of the firm’s UK Emerging Giants Centre of Excellence, said: The strength of the UK innovation brand is flying high with areas such as artificial intelligence (“AI”), cybersecurity and FinTech attracting interest and finance from greater numbers of new players to the UK market, driving up valuations for our most sought-after innovators.
 
“Our recent CEO survey found that disruptive technology was cited as the biggest threat to large corporates, so it is unsurprising that in order to accelerate their digital transformation or boost their digital capabilities, many are now partnering with, investing in, or acquiring innovative scale up businesses.
 
“Corporate Venture businesses have driven some of the largest rounds of funding for UK innovators.  The increased dependance we all have on technology has seen large amounts of funding flow towards fast growth businesses with a success story to tell around new products and services that are helping us all to adapt to a new remote world.”
With all eyes focussed on COP26, investor interest in sustainability-driven startups remains high.  In the UK over £750 million was raised by sustainability startups in Q3 2021 alone. The energy sector continues to attract the highest levels of investment from a range of sources.   This quarter for example, UK energy company Octopus Energy, raised £400 million from Al Gore Generation Fund from the US.