Venture

Ecosystem
FactBook:
London
2018
 Credits & Contact
PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
Introduction
Analyzing the most complex venture ecosystem yet
ADLEY BOWDEN Vice President,
Market Development & Analysis

At a certain scale and type, ecosystems become relatively difficult to analyze

Content
GARRET T JAMES BL ACK Senior Manager, because of complexities in breaking down the most significant factors. When
Custom Research & Publishing it comes to London, an even more global and gargantuan city than New York,
MASAU N NEL SON Data Analyst at least by area, some positive and negative factors still hold, but by virtue
CAROLINE SUT TIE Production Assistant
of its location and history among other factors, its startup ecosystem will
be different than most. Accordingly, this FactBook takes a somewhat new Look up a company.
Contact PitchBook approach, adopting a strongly visual depiction of various trends without trying And its cap table.

Contents
to draw too conclusive of conclusions.
RESE ARCH And its investors.
[email protected] Some important trends can be deduced, however, namely:

• Macroeconomic trends have not overly turned negative, but there are
And its EBITDA
EDITORIAL
[email protected] multiple reports of companies potentially relocating outside of the United multiples.
Kingdom given potential Brexit impacts, especially within fintech, which
Introduction 3 SALES
has played a key role in attracting venture investment this decade. Should
And its board
[email protected]

Economic snapshot 4
this actually transpire, it will necessarily detract from tallies of venture members.
activity. The key word in that sentence, however, is still “should”.

Deals 5-9 • London is no exception when it comes to the increasing concentration of In seconds.
COPYRIGHT © 2018 by PitchBook Data, Inc. capital and volume at later stages in the venture investing cycle, as VC
All rights reserved. No part of this publication
Outside investors: US 10-11 may be reproduced in any form or by any
invested has soared to unprecedented levels in the past few years while
means—graphic, electronic, or mechanical, angel & seed activity has contracted.
including photocopying, recording, taping, and
Outside investors: Europe 12-13 information storage and retrieval systems—
• Foreign investors, both across the Atlantic and the Channel, have only The PitchBook Platform
without the express written permission of
PitchBook Data, Inc. Contents are based dialed up their participation over the years, which has significantly has the data you need
Exits 14 on information from sources believed to be
reliable, but accuracy and completeness contributed to London’s robust tallies of activity and capital invested.
cannot be guaranteed. Nothing herein should to close your next deal.
be construed as any past, current or future • Fundraising has been quite healthy in the past few years, leading to an
Fundraising 15 recommendation to buy or sell any security
or an offer to sell, or a solicitation of an offer abundance of capital on hand for dispensing in future cycles.
to buy any security. This material does not Learn more at
purport to contain all of the information that Especially taking that last factor in consideration, and noting that foreign
a prospective investor may wish to consider pitchbook.com
The PitchBook Platform and is not to be relied upon as such or used in
substitution for the exercise of independent
investors have maintained their elevated rate of participation, trends within
judgment. the London venture ecosystem are likely to stay steady for the foreseeable
The data in this report comes from the PitchBook Platform–our data software
future. Only a significant shock to talent inflows, or related shifts, all of which
for VC, PE and M&A. Contact [email protected] to request a free trial.
are largely contingent on Brexit, could change the current status quo. One last
note: A quick thanks to Steven Spires of London & Partners, Steven Lang of
Savills and H. Ashton Crosby, whom assisted in the research process.

GARRET T JAMES BL ACK

Senior Manager, Custom Research & Publishing

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Economic snapshot Deals
Negative repercussions from Brexit After a record 2017, VC invested is booming in London A closer look at 2017
may be hard to discern in the despite slowing volume London VC deals (#) by
following stats, mainly because few London VC deals (£M) stage
have been truly observed as of yet.
Rather, a general sense of unease 3.2%
prevails. Anecdotally speaking, most 1.8%
Per the European 6.0%
concern manifests around potential Commission, general
unease around growth
access to talent, even though the job prospects persist, but
market remains relatively tight. 19.4%

2.5% 2.5%
CPI 12-month rate in growth in real GDP YoY
indicates reasonable
July 2018, per Office for
health
69.6%
National Statistics
London
unemployment hits
lowest rate in history,

£2,089.8
£4,714.3
£2,272.5
£2,363.0
£1,385.9
remaining quite low at

£1,085.8
Angel & seed Series A Series B
5.2% Series C Series D+
per June 2018 Source: PitchBook
London Economy
2013 2014 2015 2016 2017 2018* *As of August 1, 2018

Source: PitchBook
*As of August 1, 2018

PMI business activity

is slightly up at The downturn in volume has been primarily driven by a slump in angel & seed activity, attributable
to exacerbated tension around economic growth prospects and choppier financial markets
55.0 London VC deals (#) by stage
in June 2018, per 100%
Oxford Economics
(forecasted)
90%

80%

70%

60%

London house
prices decrease 50%
for first time in
years, relative to 40%
other regions in
From 2011 to 2015,
England, per GLA
Economics 30%

17% 20%
increase in volume of
digital technology jobs 0.4% 10%

-7
in the UK, according to
Tech Nation estimated UK GDP
increase, per Office 0%
for National Statistics 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
consumer confidence
in London, based on 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Gfk index—3 points
above August 2017 Source: PitchBook
Angel & seed Early VC Late VC
*As of August 1, 2018

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The late-stage boom has yet to slacken Over the past few years, median round sizes have risen distinctly across all stages,
London VC deals (£) by stage indicating the upward pressure of ample supplies of capital
Median London deals (£M) by stage
100%
£9
90%
Angel & seed Early VC Late VC £7.7
80% £8

70% £7
60%
£6
50%
40% £5 £4.4
£4.0
30%
£4
20%
£3
10% £2.2

0% £2
£1.0
£0.7
£1
2014 2015 2016 2017 2018*
Series A Series B Series C Series D+ Source: PitchBook £0
*As of August 1, 2018
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
*As of August 1, 2018

Angel volume has contracted significantly over the past

three years Late-stage valuations have skyrocketed in 2018, hinting Most active investors in
The venture landscape London VC deals (#) by stage at a mix of caution and willingness to spend on the part London VC: 2018
is awash in capital, Angel Seed of deep-pocketed investors
700
experiencing inflation
Series A Series B Median London pre-valuation (£M) by stage Investor name Deals closed (#)
in financing sizes 600
£30
and valuations—and Series C Series D+ Angel & seed Early VC Late VC Octopus Ventures 19
London is no exception. 500 £25.1
£25
Armed with plenty LocalGlobe 15

of committed capital, 400 London Co-

£20 14
investors are willing to Investment Fund

pack into late-stage 300

Downing Ventures 11
rounds in an effort £15
£12.1
200
to gain exposure to Seedcamp 10

mature startups that £10

100 £6.7
£5.9 Forward Partners 8
may be pricey but also
potentially less risky. 0
£5 £2.5 £4.0 Funding London 7
2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
£0 Hambro Perks 7
*As of August 1, 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
*As of August 1, 2018 Source: PitchBook
*As of August 1, 2018

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Overwhelming concentration in software & commercial services Broad diversity of sectors has led to significant skew in
over the past several years transactional value proportions
London VC deals (#) by sector London VC deals (£) by sector

2017 Software Pharma & biotech 2017

Other Commercial services

2018* Consumer goods Media 2018*

& recreation

IT hardware Energy

HC devices HC services
& supplies & systems

*Due to rounding, VC invested for

certain sectors is proportionally
negligible

Source: PitchBook Source: PitchBook

*As of August 1, 2018 *As of August 1, 2018

Fintech, SaaS and mobile predominate in volume, although AI has enjoyed gains Mega-deals skew AI’s proportion upward in 2018
London VC deals (#) in top five verticals London VC deals (£) in top five verticals
100% 100%
Ar�ficial intelligence
& machine learning Ar�ficial intelligence
90% 90%
& machine learning
80% 80%
Ecommerce
70% 70% Ecommerce

60% 60%
SaaS
50% 50% SaaS
40% 40%
30% Fintech 30%
Fintech
20% 20%
10% Mobile 10%
Mobile
0% 0%
Source: PitchBook Source: PitchBook
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* *As of August 1, 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* *As of August 1, 2018

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Outside investors: US

M
3.5
£ 85
e:
alu
a lv
l de M
ta 18.3
To :£ 2, 3
va lu e
* e al
18 tal
d
20 To

17 £6 4
3 .0 M
20 l va l u
e:
al dea
Tot
14 7. 8 M
20 alu e
: £3 4
al v
Tot al d e
2010

715
unique US HQ’d investors
participated in London VC
deals from January 1, 2010
to August 1, 2018

Select active US US players contribute to growth in large deals The early stage soars the highest
investors in London: Median London VC deal size (£M) with US London VC deals (#) with US investor
2010-2017 investor participation by stage participation by stage
£18 £16.9 90
1 Accel
£16
Angel & seed Early VC Late VC
80
Angel & seed Early VC Late VC
81

£14 70
2 500 Startups
£12 60
51
£10 £8.8 50

3 Beringea
£8 40
38
43
£7.4
£6 £4.8 30
21
4 Techstars
£4 20 24

£1.0 £1.5 10
£2
5(T) SV Health Investors 0
£0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

5(T) Andy McLoughlin Source: PitchBook Source: PitchBook

*As of August 1, 2018 *As of August 1, 2018
Source: PitchBook
*As of August 1, 2018
Outside investors: Europe A steady climb at the early stage
London deals (#) with European investor
participation by stage
300

Angel & seed Early VC Late VC

250 250

200

156
150

113
100
88 72

50 53

0
ue: £ 1 .7B
e a l va l
al d 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Tot
1 8* Source: PitchBook
20 *As of August 1, 2018
al
Total de value: £3.9
7
201 B

By and large, deal sizes have trended upward

2014 Total deal
valu
e: £
1 .0B
Median London deal size (£M) with European
2010 Tota
investor participation by stage
ld eal
val £9
ue: Angel & seed Early VC Late VC £8.0
£4 £7.8
8 2. 3 £8
M
£7

£6

£5 £4.4

519 £4

£3 £2.4
unique European
non-UK HQ’d investors £2
participated in London VC £1.2
£0.9
deals from January 1, 2010 £1
to August 1, 2018
£0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
*As of August 1, 2018

Select active investors in London VC: 2010-2017

1 Index Ventures 4 LocalGlobe

2 Octopus Ventures 5 London Co-investment Fund

Source: PitchBook
Passion Capital
3 *As of August 1, 2018
Exits Fundraising
A steady climb in volume is belied by diminishing exit values, Massive sums have been raised each year by the domestic VC population, with a marked surge
by and large, although 2018 enjoyed a rebound in the past few years—moreover, 2018 may set a new record
Even as exit volume has London VC exit activity London VC fundraising activity
steadily risen over this 52
Deal value (£B) Capital raised (£M) # of funds closed
decade, the volume is 23
23
still somewhat lower # of exits closed
43
than one would expect, 40 20
20 19
which is likely due to
34 35
industry trends toward 32 16 16
longer hold periods.
27 14
However, significant
exits can and will still 20
19
occur, as evidenced by 17 16 10
Funding Circle’s recent 9
8
announcement to go
£3,684.4

£1,291.6
public. What remains to

£847.0
£890.3

£687.3
£221.7

£169.3
£220.1

£128.3
£58.6

£527.0
be seen is if the current

£2,136.6
£1,670.3
£2,291.2
£1,449.4
£1,563.2
£1,418.2
£1,378.2
rate will stay steady.

£839.8

£297.1
£481.6

£444.6
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
*As of August 1, 2018

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Source: PitchBook
M&A unsurprisingly drives the vast majority of all exit volume *As of August 1, 2018
London VC exits (#) by type
The uptick in PE firms Most active investors in London VC: 2010-2017
purchasing venture- 100%

backed companies is 90% Investor name Deals closed (#) Startup Funding Club 47 Kima Ventures 33
also observed in London, 80% Acquisi�on
but by and large, M&A 70%
Index Ventures (UK) 103 Notion 46 Beacon Capital 33

still unsurprisingly serves Octopus Ventures 88

60% Playfair Capital 44 500 Startups 33
as the most popular exit
IPO
route for VC portfolio 50%
Passion Capital 78 MMC Ventures 44 Angel CoFund 33
companies. 40%
LocalGlobe 76 Force Over Mass
30% 42 DN Capital 30
Capital
Buyout London Co-
20% 75 Ascension Ventures
Investment Fund Funding London 40 30
(UK)
10%
Seedcamp 71 Forward Partners 39 Connect Ventures 29
0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Balderton Capital 60 London Business
36 Samos Investments 28
Source: PitchBook Angels
*As of August 1, 2018
Touchstone
53 Downing Ventures 35 Episode 1 Ventures 28
Innovations

Víctor Fernández
51 Richard Fearn 33 Anthemis Group 28
Massó

Accel 50 JamJar Investments 33 Source: PitchBook

*As of August 1, 2018

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