UK tech companies see fall in growth investment

Growth investment in British technology companies dropped slightly in Q1 2013, as funders looked to rebalance investments

Growth investment in British technology companies dropped slightly in the first quarter of this year, as funders looked to rebalance their investments away from internet companies.

In the first quarter of 2013, £282m was invested in 59 deals – down 5% and 8% respectively, compared with the previous quarter – according to data from corporate finance firm Ascendant.

The quarter saw a dramatic drop in the number and value of deals in the internet and wireless services sector, down 55% to 51m with just 16 companies receiving funding compared with 29 in the same quarter last year.

Stuart McKnight, managing director of the company said the investment fall in internet and wireless companies was likely to be a temporary dip.

“The scale of this decline is unprecedented. It is too early to state that there has been a waning of interest in internet plays, but we do suspect that some investors are looking to rebalance their portfolios which may have been 'overweight' in the sector,” said McKnight.

By contrast, investors invested significantly more in the software sector, as 19 companies received just under £40m compared with just 15 companies who collected £14m in the same period last year. 

The firm estimates a total of 200 companies will receive just under £1bn in 2013, based on first quarter activity.

The quarter also saw Ireland overtake London in total deal value, claiming £64m due to a mega-deal with Gaelectric, compared with £62m received by London tech companies. 

The research looks at all deals worth more than £500,000 in the growth funding market, excluding life science and bioscience.

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