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Findings from KPMG’s Q2 Global and UK analysis of venture funding

UK innovators attract record levels of Venture Capital Investment

Read the report here. 

As the pandemic forced the world to close, it opened other doors and accelerated the use and importance of technology in our everyday lives.  From how we worked, to how we shopped and educated our children and even the way we interacted with our medical providers, technology has been thrust to the centre of our lives for over a year – and for many there’s no turning back.

Given the acceleration of tech adoption due to the pandemic, there is little surprise that appetite by investors in global tech has also accelerated throughout 2020 and continues at record levels this year, as innovators across the globe became much sought after.

According to KPMG’s latest Global Venture Pulse report which looks at the major trends, opportunities, and challenges facing the venture capital market globally, VC investment soared to a new high in Q2’21, as investors continued to prioritise larger and later stage deals.

High valuations, a robust IPO market, and a hearty supply of dry powder also helped fuel investment across numerous jurisdictions. In the Americas and Europe, VC investment reached near-record highs,

Including ten deals over $1 billion, led by a $2.75 billion raise by Northvolt AB in Switzerland, and a $2.5 billion raise by US-based Waymo.

While fintech was the most attractive sector of investment in all regions of the world, health and biotech continued to see significant investment activity, in addition to areas edtech, gaming and food delivery.

Corporate VC investment was also strong in all regions of the world during Q2’21. The pandemic has really expedited the need for digital transformation, for innovation, and for doing business better in general. Many established companies globally have come to the realisation that they don’t need to innovate from scratch, and that a better approach might be to partner with or invest in startups that can help them accelerate their transformation in ways that better align with the new normal.

While the pandemic is far from over, there is a growing sense of optimism as COVID-19 vaccine distribution accelerates globally and investors focus on the sectors expected to remain attractive in the post-pandemic world – such as fintech, delivery, and B2B services.  Investors are betting that consumer shifts to greater technology use are here to stay.

It is unsurprising that the pandemic has led to a surge of investment in biotech and drug discovery businesses which was a particularly hot area of investment globally this quarter. The pandemic has only emphasized the importance of healthcare and biotech, driving interest in a wide range of health focused products and services, including digital health care and medical devices.  UK deals completed with biotech scaleups in Q2 21 were up 24% on the previous quarter.

KPMG recently launched its search for leading tech innovators from across 17 different territories and countries across the world to find a global tech innovator who will be crowned at WebSummit later this year.  What has really struck us from the competitions that we’ve been hosting across the world, is the commitment from fast growth businesses towards ESG and making the world a better place as we come out of the pandemic.

ESG – environmental, social, and governance – is expected to grow in popularity with investors, given the increasing importance being placed on sustainability across the business world. Already, there is increasing investment in businesses with ESG-aligned business models, such as electric vehicles and food tech. Moving forward, it is likely investments in these areas will continue to grow, while investors may also increase their scrutiny of ESG factors when making funding decisions. ESG concerns are increasingly playing an important role in investor thinking and becoming a major trend for VCs.  Greentech and cleantech will continue to be particularly important in supporting and accelerating the move towards achieving global climate commitments and helping to meet Net Zero targets.

The power of innovative technology businesses to deliver impact on a global scale is more important than it’s ever been.  Global innovators and the investors that sit behind them,  will play an important in role in helping the country recover and drive future growth in creating jobs, and greater equality in our society as we slowly emerge from the pandemic and look to a better, fairer, tech enabled future.