THE DEAL

Making Sense of UK Equity Investment

H1 2015

Public Summary

Contents
Features
1. H1/15: Re-writing the record books

2. UK e-commerce companies coming of age

3. Brighton: the Silicon Beach?

4. The Beauhurst Pick n Mix H1/2015

Appendices

10

5. Overview

Subscriber only

5.1 UK equity investment

Subscriber only

5.2 Stage of evolution

Subscriber only

5.3 Top sectors

Subscriber only

5.4 Top investors

Subscriber only

6. Stage of evolution

Subscriber only

6.1 Seed-stage

Subscriber only

6.2 Venture-stage

Subscriber only

6.3 Growth-stage

Subscriber only

7. Sectors

Subscriber only

7.1 Technology

Subscriber only

7.2 Business and Professional Services

Subscriber only

7.3 Industrials

Subscriber only

7.4 Leisure and Entertainment

Subscriber only

7.5 Retail

Subscriber only

7.6 Media

Subscriber only

The Deal H1/15 (Public summary)

1. H1/15: Re-writing the record books

Re-writing the record books

H1/15 has been exceptional for fast-growth companies, who once

again re-wrote the record books by securing a total of 2.04bn from
investors (the best half year total since 2011) across 577 deals.
With H1/15s investment equivalent to 75% of the total amount
invested during 2014, were well on track to reach our forecasted
figure of 3bn invested in 2015.

Election disruption minimal...

Were well on
track to see our
forecasted figure
of 3bn invested in
2015

The results of H1/15 are particularly encouraging considering the

potential for investor jitters posed by the general election back in
May. Our fears that we might see serious disruption similar to that
experienced by Scotland during its referendum for independence last
year were allayed when we looked at investment. Including Aston
Martins outlying deal, Q2/15 recorded the largest total investment
ever 1.08bn.

It was the
first year weve
seen deals dip
between Q1 and
Q2

...or was it?

But before we breathe a sigh of relief, the deal numbers might give
reason to be nervous. While we usually see activity pick up in Q2 after
a slow start to the year, 2015 was the first year weve ever seen deal
numbers fall between Q1 to Q2. Could this spell trouble ahead for
2015s otherwise promising outlook?

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The Deal H1/15 (Public summary)

Venture-stage uptick

We saw that both the seed-stage and growth-stage experienced a slight downturn in deal numbers
during Q2/15 compared with the previous period. But venture-stage companies had a much better
time of it, enjoying a rise in deal numbers from 80 to 95, and seeing investment grow from 186m
to 260m quarter-on-quarter. Its great to see young companies converting seed-stage success into
venture-stage growth.

2015 the year of faster growth?

Judging by the first halfs record-breaking results, 2015 looks set to be the best year yet for UK equity
investment. With the government also making positive noises, having pledged to treble the number
of startup loans, we reckon this will be the year ambitious UK companies can really pick up the pace.

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The Deal H1/15 (Public summary)

2. UK e-commerce companies coming of age

UK e-commerce companies really came into their own during

H1/15, as the sector recorded its highest half-year figures in
our records, with 232m total investment across 63 deals.
Investment into the sector in H1/15 was nearly double that
of H2/14 a staggering rate of growth. To give a sense of
the sectors more long-term growth, its telling that H1/15s
total investment isnt far off 2014s total, and has already far
exceeded 2013s.

E-commerce
recorded its highest
figures ever with
232m invested
across 63 deals

Much of the investment went to growth-stage companies.

Wahanda, the online-deal marketplace for health, beauty,
and wellness products had a superb start to the year. The
London-based company secured two huge growth-stage investments: $46m in May and another
$73m in June. FarFetch, which operates an online marketplace for independent fashion boutiques
and designer brands, also completed a huge growth-stage deal
of $86m in March.

Wahanda had a
superb start to the
year, securing two
huge growth-stage
investments

We witnessed investment into venture-stage companies too.

London-based Yieldify, with its multi-channel retail analytics
software, completed an $11.5m round with Google Ventures
and SoftBank Capital in June. Googles backing could be
deemed testament to the strength of Yieldifys product, as its
one of only a handful of investments into UK companies the
corporate has made since putting $25m into Ubiquisys way
back in 2007.

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The Deal H1/15 (Public summary)

A natural
progression is to
expand abroad
thats exactly whats
happening

So, whats next for the UK e-commerce companies that are coming
of age? Well, a natural progression is to expand abroad and
thats exactly whats happening.
Some, like Shopa, are eyeing the Chinese and Indian markets.
In June, expansion into China became a more attractive prospect
after it was announced that foreign companies could retain full
ownership of e-commerce businesses operating in there. Chinas
recent economic woes, however, may make businesses wary of
expanding there too hastily.

Others are looking closer to home. Wahanda has been growing

across Europe on a significant scale, completing several acquisitions the most recent being French
company Zensoon. Similarly Deliveroo is expanding its food delivery
network into Western Europe after rolling out across UK cities.
This is all very promising for the UK e-commerce sector. Not only
are we seeing record-breaking figures, but, judging by the types
of investors getting involved and the expansion strategies being
pursued, these companies are exciting on a truly global scale.

These companies
are exciting on a
truly global scale

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The Deal H1/15 (Public summary)

3. Brighton: the Silicon Beach?

Brighton has long been a favourite amongst holidaymakers and sun-seekers, but in recent years
its been gaining a different reputation as the Silicon Beach. But with silicon being tacked onto
all sorts of geographic features fens, glens and gorges we decided to see whether Brighton
really was deserving of the accolade. After trawling our data and speaking with some Brighton-based
companies, we think the findings are quite encouraging.

We saw just three

Brighton companies
receive investment in
2013. This year weve
already witnessed nine

Since 2013 people have been heralding the arrival of a

Brighton startup hub, but we reckon its only now that all
that hype is really cementing into something worth talking
about. Whilst we saw just three companies receive equity
investment in Brighton during 2013, this year weve
already witnessed nine, far outpacing deal number growth
in the wider market. The government could claim some of
the credit for the rise, having signed the Greater Brighton
City Deal in March 2014 that aimed to unlock more than
170m of investment to support the tech sector.

Around 1,500 tech companies call Brighton home, according

to government stats around the same as Londons Silicon
Roundabout (although were skeptical about both figures)
and TechCity UKs 2015 Technation report revealed Brighton
has the highest density of digital companies in the whole of the
UK. So its promising that at least some of these fast-growth
companies are starting to attract the attention of investors.

Brightons universities
are making a positive
contribution to fastgrowth companies
Ian Monaghan, Big Bit

The quirkiness that

pervades the city
drives innovation by
nurturing a less riskaverse culture

But figures can only

get you so far. To
get a better idea of
whats really going on
in Silicon Beach, we
Sam Silverwood-Cope,
decided to have a chat
Intelligent Positioning
with some Brighton
companies that have
raised equity funding
Intelligent Positioning, Brandwatch and Big Bit.

Location is one factor that could well be giving Brighton a

boost. I think Brightons growth embodies a larger, nationwide
shift away from London, says Sam Silverwood-Cope, co-

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The Deal H1/15 (Public summary)

founder of Intelligent Positioning. Its only 45 minutes away, but companies like us pay lower rents so
can be more flexible and competitive than established London agencies.

There arent enough

investors on the look-out
for the next big thing

The citys unique culture also seems to play a part in

attracting and nurturing innovative and ambitious firms.
According to Joel Windels at Brandwatch, the quirkiness
that pervades the city drives innovation by nurturing
a less risk-averse culture. It also seems well set up to
cater to fast-growth companies. Ian Monaghan at Big Bit
applauded the positive contribution the citys universities
are making to the fast-growth companies, his company
itself being based at the Sussex Innovation Centre.

Joel Windels, Brandwatch

We did, however, get a sense that Brighton could be doing

more to live up to its Silicon Beach name. Joel feels there
arent enough investors on the lookout for the next big thing. Were inclined to agree 24 deals since
2011 is definitely on the low side, especially if there are, in fact, 1500 tech companies based there.
So, it seems that whilst Brighton is home to a lot of interesting companies, it would do well to support
these firms growth ambitions, particularly when it comes to funding. Without greater attention from
investors, its a city that risks not realising its potential.

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The Deal H1/15 (Public summary)

4. The Beauhurst Pick n Mix H1/2015

Throughout H1/15 weve witnessed a host of innovative UK companies, across all sectors, receiving
investment. From the rapidly evolving payment processing space, to companies keeping the country
connected with high-speed broadband even the tasty prospect of craft-beer brewing theyve all
attracted investor attention.
Payment processing is a space that impacts practically all aspects
of daily life. Consequently its a magnet for development. Barclays
recently unveiled their three new bPay devices for contactless
payment a wrist wearable, a key-fob, and a sticker for your phone.
And the UK launch of Apple Pay which will allow iPhone6 users
to pay for things with a wave of their handset took place this July.
But its not just high-street
banks or Californian tech
giants that are devising novel
approaches
to
payment
processing.
London-based
Sthaler has thrown biometric
technology into the mix, and
designed a product called
FingoPay, which scans the
unique pattern of a persons
blood vessels in their fingers.
This pattern is then stored and allows consumers to complete
transactions by barely lifting a finger. Sthaler, which completed a
450k seed-stage deal in June, has developed the technology in
conjunction with Japanese conglomerate Hitachi. We think its great
to see such a young UK company collaborating on an international
scale.

The Currency Cloud

has completed six
rounds of funding
since 2011

Sthaler has
developed its
technology in
conjunction with
Hitachi

Droplets payment
processing system
allows transfers via
email

Other fast-growth UK companies operating in the space include Droplet and The Currency Cloud.
Droplet raised 575k on Crowdcube in May for its payment processing
system that transfers money securely via email, while London-based
The Currency Cloud has completed six rounds of funding since 2011
for its foreign-exchange payment processor.

Signature
Brew makes
craft beers in
conjunction with
musicians

This new ease with which money can be transferred is no doubt music
to the ears of craft beer brewer everywhere regardless of how their
customers might be feeling when confronted with their bank balances
the morning after. The UK is officially the capital of beer, according to
the Good Beer Guide, with more breweries per capita than any other
country. Signature Brew, which makes craft beers in conjunction with

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musicians, raised 200k back in March, and Camden Town Brewery despite incurring the wrath of
the crowd after some controversial share-price fluctuation raised 2.76m on Crowdcube.
For the brewers still struggling to shift their beer despite the aid of contactless payment processors,
young London-based startup DeskBeers has come up with a solution. Raising 128k through
Crowdcube earlier this year, it operates an online subscription service that delivers the best tipples
from small and independent breweries to offices on a Friday afternoon.

Broadband
provider Gigaclear
received 30m in
May

Of course an online subscription business model wouldnt be

possible if it wasnt for the companies working to deliver highspeed broadband to even the most far-flung regions of the UK.
Representing George Osbornes drive to make broadband a
basic legal right in the UK, Gigaclear received 30m in May
towards providing ultra-fast broadband to homes and businesses
in rural Oxfordshire communities. Similarly, North Tyneside-based
Broadband Satellite Services completed a 6.3m growth-stage deal
with the Business Growth Fund in June. Facilitating growth in the
UK at a fundamental level, these guys are the real unsung heroes
of H1/15!

10

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Beauhurst

2015 http://www.beauhurst.com/ Data and content by Beauhurst. Editor: Jamie White & Valerio Campanella.

Writer: Joe Gardiner. Design and graphics: Jennifer Glover & Bernard Stockermans. Not for sale.

Find out more about our methodology. Data for this report was prepared on 5/7/15 deals disclosed after this date will not be
included.