The truth about venture funding

Investors are cautious about where to put their money

Venture capital (VC) investments in the North West exceeded £43m in the first quarter of 2024, according to KPMG Private Enterprise’s latest Venture Pulse report.

Firms that attracted the largest investments in the North West include, AccessPay with a £19m ($24m) venture capital investment and the Insights Family with a £5.6m ($7m) investment. Both businesses are based in Manchester.

In 2023, there were a total of 114 VC investments in the North West worth more than £462m ($575.6m) combined.

Nationally, VC investment into UK businesses continued to slide in the opening quarter for 2024, falling to levels last seen in 2018.

Coming off the back of $4.9bn raised by UK businesses in the last quarter of 2023, just $3bn in funding was raised in Q1’24 – the lowest amount seen in 22 quarters.

Deal volumes were also down with the Venture Pulse report recording just 519 deals completed in the period, levels not seen since 2016.

While deal volume was very subdued, deal sizes remained quite healthy as VC investors focused their funds on the most promising start-ups.

Nisha Sharma, corporate finance partner at KPMG in Manchester, said: “With a subdued start to the year and ongoing economic uncertainty, it is clear that investors are still very cautious when it comes to where they’re putting their money.

“Early stage businesses in the North West that are looking to raise funds over the coming months will hope for greater certainty to encourage venture capital investment in the region, but for now, will need to face into higher levels of investor scrutiny over their business plans and strategies for a positive outcome.”

She added: “The good news is that deals are still getting done and there remains an abundance of capital to be deployed across the region for those with a clear value proposition. I remain hopeful that market activity will pick up in the following months.”

In March 2024, the Wired for Growth taskforce, led by KPMG Acceleris, was launched, to help North West founders navigate barriers and identify the opportunities that exist for start-ups.

Patrick Molyneux, Partner – Head of Products and Partnerships at KPMG Acceleris, said: “Wired for Growth presents a unique opportunity to take a holistic view of the ecosystem to help close the funding gap for founders.

“Listening to real experiences and taking that onboard with the expertise of business, academia, investors, governing bodies and advisors offers a proposition in the North West that has not yet been seen, and it sets an example for other regions to follow.

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The Rainmakers platform continues to look under the bonnet on some of the key deals and trends in the Northern mergers and acquisitions market.

This week, we included a deep dive into the investment strategy of private equity investor Inflexion, in the light of their backing for Manchester-headquartered global fitness business Ultimate Performance.

The link to that subscriber only piece is here.

Last week, we took a closer look at some of the trends in the professional services market.

This is mental health awareness week. We thought we’d bring you some remarkable insights from a woman working in the corporate finance world who thinks the way the advisory and investment is set up hasn’t been good enough.

Charlotte Ashton from Implicit Advisory, pictured on a Freshwalks with Helen McHugh of Marsden Strategy, shared examples of high divorce rates, mental health challenges, and genuine feelings of emptiness from people who’ve been through a ‘successful’ deal process.

It asks some tough questions. And all of them chime with our story from Jo Sellick who sought help from private clinic The Priory after his exit.

If you’re a subscriber. You can read it here, but do please subscribe to hear Charlotte Ashton’s remarkable insights and experiences.

Here’s what Charlotte said: “An absolute honour and delight to be featured in today's TheBusinessDesk.com and Rainmakers subscriber content.

”There is no doubt Private Equity has transformed the landscape for regional businesses for the better.

”The Rainmakers conference in March demonstrated this with the sheer volume of of big hitters in the room sharing their perspectives on regional investing and good news stories.

”To be clear my experience of working within PE was positive. I'm a huge advocate of PE in general.”

She added: “However, my role at Palatine and in the 3 years since setting up Implicit Advisory Limited demonstrated, there is still work to do in supporting founders to successfully navigate the PE landscape.”

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HELP WANTED

The reaction to our piece about Jo Sellick, the recruiter and business owner who shared his story with us has really struck a chord. 

We love stories that relate people’s experiences. I’ve got a piece next week with a principal in a corporate finance firm who remains appalled at the inefficiency of the whole deals process.

Surely with the advent of AI, this is going to change soon.

If you have something to add, or strong feelings on this, please let me know.

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This is our end-of-week piece, which is free to everyone.

Next week we’ll have two long pieces, focusing on happenings going on in the advisory and funding market - what it means and where things are going.

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OUR NEXT RAINMAKERS EVENT

Our next Rainmakers lunch will feature special guest Ruth Percival, above, CEO of Contollo Group, a buy and build consultancy group backed by private equity investor NorthEdge, a deal that also made the shortlist for this year’s Rainmakers awards.

We’re giving subscribers to Rainmakers the first shot at tickets for this event, which you can register for here.

As she embarks on this new venture, this seasoned leader with extensive expertise in the corporate finance, power/energy, and healthcare sectors, will share her strategic ambitions for Contollo and the lessons learned from her impressive track record of leading multi-disciplinary teams across diverse professional service disciplines including commercial/sales and operational/service delivery roles.

She describes her leadership as values-driven, emphasizing integrity, kindness, and collaboration.

Her latest venture, Contollo is a progressive new consultancy that works with commercial developers to offer consulting services in Cost Management and MEP, with particular expertise in smart buildings.

As reported on TheBusinessDesk.com at the time, Contollo made its first acquisition in February 2024 to acquire Abacus, a Manchester-based cost management consultancy which has worked for Vita Student Living, Sunderland AFC and Bolton Wanderers FC.

Contollo sees Ruth once again working alongside entrepreneur Oliver Dennis, as she did at medcomms consultancy group Fishawack.

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