TLDR:
UK venture capital funding fell by almost half in 2023, as rising interest rates and an economic downturn suppressed investment in start-ups and tech firms. Data from Pitchbook shows that UK venture investment dropped to £16.1bn ($22.c) last year, down from £28.9bn the previous year. The decline in funding was part of a wider drop-off in global investment, with European venture capital investments declining to $57bn from $105bn in 2022, and global investments falling from $531bn to $345bn.
Despite the overall decline in investment, the average deal size stayed relatively steady. Additionally, the value of exits in Europe plummeted to €11.8bn, the lowest in a decade. However, overall valuations remained high, and some high-profile firms have been forced to reduce their valuations.
Analysts predict a slowdown in venture capital investment in “impact tech” as interest rates rise, potentially dampening investors’ appetite for such investments. The funding of UK fintech firms also decreased as higher interest rates made investors more cautious.
Key elements:
- UK venture capital funding fell to £16.1bn in 2023, down from £28.9bn the previous year.
- European venture capital investments declined from $105bn to $57bn.
- Global investments decreased from $531bn to $345bn.
- The value of exits in Europe hit its lowest level in a decade, reaching €11.8bn.
- Overall valuations remained high, but some firms had to reduce their valuations.
