The number of first-time funding rounds into UK seed-stage startups remained flat in 2021, despite venture capital overall seeing another record year of funding, according to new research commissioned by SFC Capital.
The data shows a decline in funding rounds between 2018 and 2020, and only a marginal uptick in 2021, far below the growth in later-stage venture capital. SFC Capital is calling for urgent action to reinvigorate seed-stage investment and help secure the next generation of innovative businesses emerging across the UK, with SEIS at risk of becoming redundant as a funding mechanism due to startups’ growing funding needs and the impact of inflation.
As funding begins to bounce back after the pandemic across many sectors, there were 1,635 first-time seed-stage deals completed in 2021, up only 1.2 per cent from 2020’s deal volume of 1,615. This represents a 18 per cent decline from peak funding of 2,005 in 2018. There is a clear gap emerging between seed-stage, and later- stage funding, as the volume of investment deals of £1m+, between 2020 and 2021, jumped from £495m to £989m, almost doubling. This analysis is based on Beauhurst’s data which includes every UK announced and unannounced deal.
