UK Startups: Get your funding while you still can

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10poundsYou think you have it bad, Mr.-Silicon-Valley-entrepreneur-trolling-Sand-Hilll-Road-for-cash? Try life in the UK.

Out of 39 firms that were active investors in British start-ups over the last five years, only thirteen venture firms have £5 million or more left in their coffers to invest, according to NESTA, the UK agency that advocates for start-ups and also sponsored the recent Traveling Geeks blogger tour.

That’s right: All but thirteen firms in the United Kingdom are either completely tapped out or have committed the rest of their funds for follow-on investments in existing portfolio companies. In total, NESTA estimates there’s about £400 million left that’s uncommitted among the thirteen, with only half of that available for brand-new series A deals. To put that into perspective, there’s roughly the same amount of money in the fund Marc Andreessen just closed than there is for new companies in the entire United Kingdom right now.


  • Amanda Rose

    Those are certainly interesting stats from NESTA. I think it’s important to not forget the vast array of angel investors in the UK/Europe who see this downturn as a fantastic opportunity to seed their money with companies who are being innovative. Investors like Michael Birch and Brent Hoberman for example, recognize there is also a gap between the amount that VCs and angels will invest by establishing their new PRO Founders Fund.

    We have Michael joining us at The Glasshouse in London on Tuesday to discuss this very topic at an event called ‘Show Me the Money’.

  • Andrew Smith

    This “equity gap” has been a problem in UK for the last decade. Yes new wealthy serial entrepreneurs like Brent and Michael are at last doing what has happened in the Valley and pumping seed capital back into the eco-system. But why didn’t the VC’s. Oh yes that would mean more work for less return. i.e more smaller deals instead of one bumper deal. Lazy f$%kers!

    The problem is not only “show me the money” in UK but “show me an original idea” – most the new ‘original” ideas are either based on Twitter – skimlinks, tweetmeme, tweetdeck.

    Spotify, Moo, Alertme, Amee, Zemanta are some of the best startups but that is pretty thin in the ground.

  • Markus Karlsson

    Sat in on a pitch meeting recently with two teamsters from a VC fund.

    They insisted on three year projections, plus around 80 pages of documentation up-front. The reality is that most of what they wanted was of course irrelevant for the stage we were at.

    From the outset it was very clear that they had not even looked at the executive summary. During the pitch it was clear they had no understanding of what ‘software as a service’ was, or little else for that matter. At the conclusion it was clear that nothing had gone in.

    I asked them what the next steps were, and they told me that they had to give the figures to a financial expert and get a business expert to look at the business plan itself.

    In practice many VCs are better than this, but there does seem to be a fairly limited depth to the both the technical aptitude (especially where software is involved) and willingness to put in any effort. It’s no wonder the funds themselves are not getting funded.

    The thing that amazes me is that there is any UK software industry at all given the weakness of the funding sector here.

  • Emmanuel Moll

    Interesting read, unless I missed it, the report does not name the 13, is there any way to get this list?

  • Jens

    @Emmanuell Moll

    You can find a list of recently closed VC funds here:

    Find UK funds by searching for ‘united kingdom’ in the location field.

    There are more UK funds that have closed in Q1 & Q2, but many of these have not put out any press release (one really has to ask why).

    If anybody wants to add a fund to the list, please feel free.

  • assicacicsnub
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