Rocket into 2021 | Part 2

Posted on Friday 22 January 2021 by Somil Goyal | Investment Lead

We at GovGrant have 15 years’ experience of helping innovative UK companies, and their investors, achieve commercial value from innovation. With our Rocket into 2021 campaign, we are looking in-depth at the UK private capital markets, and how to help clients and investors improve cash flow and valuation in these difficult and volatile times.

UK private capital markets in 2020

We analysed UK private capital market deals over 2019-20. Our dataset covers several thousand investors and companies in the UK. This includes venture capital, private equity, and corporate deals. Our top-level insights were published on 11 January 2021. This showed a 30-50% tougher climate, esp. for smaller companies.

In this blog, we look at types of deals. The results shed more light on the challenges inflow of private capital to innovative UK companies. Deal counts fell by a daunting 10-20% quarter-on-quarter, with the impact worst for start-ups.

Findings and explanations

For details see our findings chart here.

The chart shows count for private deals across types normalised by the volume in early 2020, i.e. just before the lockdown. Normalised volume for most deal types was flat from Jan 2019 to Mar 2020 and then fell sharply. The impact was worst for start-up financing, with VC and Seed deals falling the sharpest. This is in very marked contrast to IPOs.

NB: Quarterly allocation of 2019 deals is approximate. Q4’20 data is still being collected, so some improvement is possible.

Cash and capital

Smaller UK companies and their investors, and especially start-ups, have a specific and immediate challenge. Such companies face a weaker capital raising climate. This impacts their market position, employee morale, and viability. Their capacity to benefit from opportunities from post-vaccination reopening are hampered.

Nonetheless, these are companies with strong potential. They need some timely help. We at GovGrant bring this help, as specialists in unlocking capital for innovative companies. We help monetise past investments into research and development of Intellectual Property. This makes fresh cash and capital available for reinvestment, runway, and strategic options.

Our specialisation helps in three specific ways:

  1. Spotting opportunity not identified before, thus creating a larger cash and capital outcome. Our clients typically benefit from over 2x higher returns.
  2. Working at pace and releasing cash sooner, e.g. for companies who had their year-end in December 2020, we can help get relief in February or March, rather than wait for mid-2021 or later.
  3. Quality and reliability, e.g. our clients benefit from one of the industry-lowest enquiry rates.

How to get started?

At GovGrant, we have a dedicated offer for privately funded companies and their investors. This adds specific value to the investors and their portfolio. We already work with dozens of active UK investors and hundreds of privately funded companies. Contact us to learn more.

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About Somil Goyal | Investment Lead

Somil Goyal | Investment LeadHere at GovGrant, Somil works with the venture capital and private equity community to drive value from R&D and innovation activity in their portfolios. He brings an understanding of your investment thesis and portfolio, in order to improve return on capital deployed. View profile