New data shows that the amount of capital raised in the UK by VC funds during the first quarter 2024 was significantly lower than the year before, causing a reduction in ‘dry-powder’.
According to Pitchbook’s market snapshot , between January and March, venture capital funds raised PS700m in 10 vehicles.
This is on track to raise PS2.8bn this year, compared with PS7.4bn by 2023.
The report states that “the absence of large closings is driving the downturn,” in which smaller, emerging firms have taken share of LP’s capital. “Furthermore compared to trends seen earlier in the year 2023, UK venture capital dry powder decreased as deal activity was robust, but fundraising levels were under pressure.”
A separate report published by Dealroom in January found that VC funds had raised $25bn over the last three-year period – indicating that there was still dry powder available to be deployed on private markets despite the decrease in the first quarter.
The Pitchbook report stated that VC deals were off to a “weak” start. The PS2.3bn in VC investments into companies during this period represents a decrease both quarter-overquarter and year-overyear.
The announcement comes amid a continuing macroeconomic backdrop of challenges, and the market consensus is that the Bank of England will be slow to follow European counterparts by reducing interest rates.
The capital raised by UK Private Equity Funds in the first quarter is already half of the total amount that will be secured for the entire year 2023. Notable fund closures include Permira, Apax and Apax.
London attracted the lion’s share of VC investment between 2014 and 2024 at PS87.7bn.
Outside of the capital, Cambridge was the top VC deal with a value of PS6.8bn. Oxford came in second at PS4.4bn.
Pitchbook found the median 10-year VC valuations of Oxford and Cambridge exceeded London – however, the gap between the two cities is still vast.