South West scale-ups attract more than £37M in venture capital funding, report finds

By Nick Batten on 20 June, 2024

Innovative businesses in the South West of England attracted $48 million (£37M) across 21 deals in venture capital (VC) funding in the first quarter of 2024 (January, February and March), according to the latest KPMG Private Enterprise Venture Pulse report. 

The largest rises came from waste-to-energy company WASE ($10.8M [£8.4M]), Exeter-based SENISCA ($4.7M [£3.6M]) to advance the development of drugs that target the causes of age-related disease, and ESProfiler ($3.5M [£2.7M]), a Cheltenham based startup which aims to boost cybersecurity efficiency.

In comparison to the same period in the previous year, both the value and volume of deals experienced growth. During the first three months of 2023, 18 transactions generated $23M [£18.1M]).

In 2023, there were a total of 112 VC investments in the South West, worth more than $466M (£366M).

Kay Drury, Transaction Services Partner at KPMG in Bristol said, “It is encouraging to see the resilience of the pool of startups we have emerging in the region.

“Over the last 18 months, the macroeconomic environment has changed dramatically with political uncertainty and cost of borrowing all rising. As we find ourselves in a new normal, we need to think about how we move ahead, and right now, investors are focusing on companies prioritising routes to profitability and creating sustainable growth to succeed in the current environment.

“The diversity of our scaleup ecosystem still attracts VC investors to the UK who are looking for innovative companies with robust unit economics and a path to growth. As the economy remains challenged continuing to support fast growth businesses is important to the UK’s economic recovery and growth, and is key to levelling up as we look to attract and develop talent across our regions.”

What’s happening elsewhere?

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

Global VC investment fell slightly from $83.8 billion (£66 billion) across 9,458 deals in Q4’23 to $75.9 billion (£59.8 billion) across 7,520 deals in Q1’24 amid geopolitical tensions.

VC investment in Europe rose from $15.1 billion (£11.8 billion) in Q4’23 to $17.9 billion (£14.1 billion) in Q1’24, buoyed by a large $5.2 billion (£4.1 billion) raise by H2 Green Steel in Sweden.

Cleantech the biggest winner in Europe

While AI attracted the largest share of investment globally, cleantech investment accounted for many of Europe’s largest deals in Q1’23, including raises by Sweden-based H2 Green Steel ($5.2 billion) and Alternative Energy Equipment ($159 million), Germany-based Sunfire ($233 million) France-based Electra ($334 million), and Germany-based Ineratec ($129 million).

KPMG uses PitchBook as the provider of venture data for the Venture Pulse report. 

For more information about the KPMG Private Enterprise Venture Pulse report visit: kpmg.com/xx/en/home/campaigns/2024/04/q1-venture-pulse-report-global.html 

Pictured above: Kay Drury, Transaction Services Partner at KPMG