November 9th, 2017 / Insight posted in Articles

UK growth capital reveals resilience of the SME sector in Q3

Despite prevailing uncertainty in the macro-backdrop, the resilience of the UK SME sector is clear from a strong Q3. According to research by chartered accountants and business advisers Kingston Smith during the last quarter, 117 private companies raised £501.3 million of growth funding.

This accelerates the impressive momentum already under way, setting 2017 on course to be a record year.

Kingston Smith’s analysis shows that Q3’s figures bring the year-to-date total to £1.35 billion raised by 330 companies, suggesting 2017 will comfortably exceed 2015’s peak when 394 businesses raised £1.53 billion.

The firm reviewed mid-market range transactions in which UK private companies have raised £1 million to £15 million of growth equity capital.

The figures highlight the strength of this part of the UK economy. John Cowie, partner and head of growth capital at Kingston Smith, says: “We are genuinely encouraged to see this dynamic part of the market grow. While we understand the tremendous growth prospects these businesses have, it is very promising to see more international backers invest as a vote of confidence.”

The technology sector including software and digital businesses, accounted for 21% of deal volume and 28% of value – the largest share.

Significant deals of note in Q3 include:

  • FiveAI, a UK start-up developing fully autonomous vehicles by using artificial intelligence and machine learning, received a £14 million round of funding led by European VC Lakestar. Amadeus Capital Partners, a global technology investor, initially provided $2.7 million to the firm in 2016, and increased its stake in this latest round.
  • Business Growth Fund, one of the UK’s biggest investors in SMEs, has backed Filmore & Union, a chain of UK restaurants focusing on healthy eating, with £3.5 million of investment.
  • Foresight Group has backed another business in the British media industry with a £2.25 million investment into Cinelab London, a post-production service provider with expertise in film.

Read more in our Growth Capital Update