Tech investment deals in the North surpass £207m in Q3, KPMG reveals

Throughout the third quarter in 2017 a total value of £207.6m worth of growth investments were made into technology businesses in the North.

This is double the value of the previous three months (£101.5m in Q2 2017) and represents almost four times the value achieved in the same period last year (£54.8m in Q3 2016).

The data, analysed by KPMG’s Northern tech sector team, shows that there were 45 growth investments made between June and September 2017, as well as a further 26 acquisitions.

A total of 11 investments were made into Yorkshire-based tech companies. The top three comprised an angel investment of £3.05m in Wakefield-based optical computing startup Optalysis; a £2.19m follow-on investment into Leeds University spin-out Ionix; and a £2m investment into Doncaster’s Origin Broadband by Calculus Capital.

M&A activity involving Yorkshire tech companies also spanned 11 transactions, topped by the £70m reverse takeover of Perfect Commerce by Wetherby-based Proactis.

Graham Pearce, KPMG’s tech sector lead for the North, said: “With over £200m of invested funds, this is the most heavily invested quarter since we began our analysis a year ago.

“Testament to the fact that a rise in Northern tech investment is not just down to one or two extraordinary ventures, Q3 has also seen the highest number of transactions of the past twelve months.”

KPMG’s findings highlighted that software had the strongest quarter with £30.4m invested in 17 companies, closely followed by internet and media businesses, with £29.2m invested in 13 companies.

On a rise in investment from overseas, Pearce commented: “Overseas investment in UK tech has historically been London centric, but a number of recent investments have seen significant overseas interest, with funds flowing in from tech enterprises and financial investors across the US, Europe and Asia.

“The size of these investments is not minor; for example, the recent £20.2m PushDoctor fundraise in Manchester saw participation from Silicon Valley-based Partech Ventures and Paris-based Seventure Partners.”

The Northern Powerhouse Investment Fund, which opened in February 2017, made four investments of under £1m in Northern tech start-ups in Q3, with three in Yorkshire and one in the North East.

There were 26 completed acquisitions in the quarter, a 79% increase on Q3 2016.

Pearce concluded: “This suggests confidence in the M&A market returned to the Northern tech sector in the year after the shock of the Brexit vote.”

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