2021 was a phenomenal year for the UK growth capital market, with investment activity not only surpassing that seen in 2020 – a year majorly impacted by the Coronavirus – but also that of the years prior to the pandemic. 1,490 UK businesses raised a total of £6.82 billion, a substantial jump in terms of deal activity and capital raised compared to the last few years.
The launch of the government’s Future Fund certainly helped to fuel activity at the start of the year, but it is extremely encouraging to see that the growth capital market continued in its resurgence when the initiative ended in January 2021.
Technology was by far the most attractive sector for investors throughout the year. “The demand from investors for tech-enabled solutions continues to soar, with the competition for the best businesses presenting valuation challenges for many investors. The macro factors that have led to this market are well set, so we expect this trend to continue through the year ahead and beyond,” says Paul Winterflood, Corporate Finance Partner at Moore Kingston Smith.
Although it is prudent to be aware that increasing prices for commodities, pinch points in the supply chain and rising inflation on the wider economy could impact fundraising activity, we remain optimistic about the outlook for 2022, especially as we emerge further out of Coronavirus restrictions. John Cowie, Head of Growth Capital at Moore Kingston Smith, comments: “Although some of the uptick in 2021 must be down to deals which were held up in 2020, nothing could have prepared us for a near doubling of deals done and funds raised. It’s cause for optimism and bodes well for UK entrepreneurial businesses as we kick off 2022.”