Angel investors overtook crowdfunders for investments in unlisted UK startups last year for the first time since 2014, according to data published today.
London analytics house Beauhurst tracked more funding activity by individual business angels than crowdfunders in 2021 by number of deals — a result of “genuine increasing activity, as well as more companies choosing to announce angel participation”.
Investors injected more than double the amount of capital into private UK companies in 2021 than in 2020, rising from £11.3bn to £22.7bn. Private equity and VC funds maintained a significant lead over other fund types, participating in 1,359 of the 2,679 rounds announced (51%).
But while VCs and PEs retained their title as the most active investor type, all categories increased their activity in 2021, particularly individual angel investors, finishing on 602 deals, compared with 359 in 2020 — surpassing the number of deals facilitated by crowdfunding platforms like Seedrs and Crowdcube.
Angel investing on this level is an indicator of a healthy, growing startup scene. In thriving hubs, people who make their fortune from startups spawn new startups by recycling money and expertise back into the tech arena, creating what techies call a “flywheel” effect — a sequence that’s clearly advanced in the UK.
Beauhurst data also shows how UK startup valuations are skyrocketing in later funding deals.
Valuations rocketed 28% from a median pre-money of £4.45m in 2020 to £5.70m in 2021. These figures climbed across every company lifecycle stage, with the greatest increase happening at the growth stage, rising from £48.0m to £73.9m.
VCs and founders say that skyrocketing valuations in Europe could see some correction if this year’s fall in publicly listed tech stocks also dampens valuations for private companies. The Beauhurst data suggests that’s not something that earlier stage founders need to worry about given the relatively small increase in valuations.
Meanwhile, the data provides pushback to the claim that the boom in remote work has made companies’ hometowns less important. For valuations, location still matters hugely; the median company in London was valued at 1.6x higher than the median company in the rest of the UK in 2021, the report says.
Beauhurst tracked 2,679 equity investments into private UK companies over the course of 2021. These deals totalled £22.7bn— more than triple the amount invested in 2016.
The data provider tracks every equity fundraising into UK companies, including those that aren’t announced to the public. These unannounced rounds — also known as stealth rounds — make up an estimated 70% of deal volume and some 30% of annual deal value.
Eanna Kelly is a contributing editor at Sifted. He tweets from @EannaKelly1