British tech deals hit a record high in 2016, with the number of investment rounds and takeovers rising by 40pc in a breakthrough year for UK start-ups.
However, that growth tailed off after June’s Brexit vote and funding fell into decline at the end of the year.
Some 4,009 deals were notched up in the technology industry in 2016, up from 2,858 the previous year and 1,714 the year before, according to figures compiled for The Sunday Telegraph by technology investment bank GP Bullhound, using data from financial information provider Capital IQ.
However, the figures showed a year of two halves. GP Bullhound said 2,426 deals were completed before the June 23 referendum, more than double that of the same period a year earlier. The number of deals after the vote was 1,583, and in the fourth quarter of the year it was 710, a 28pc fall on 2015.
The decline came despite high-profile deals such as Softbank’s £24bn takeover of ARM Holdings and the £1.4bn sale of Skyscanner to China’s Ctrip, as well as Deliveroo’s $275m funding round.
Hugh Campbell, GP Bullhound’s co-founder, said that, while Brexit had been a factor in the second-half slowdown, the election of Donald Trump and wider global uncertainty had also played a role. Investors have become more prone to risk and reset their expectations, while entrepreneurs have refused to budge on valuations. That has created a stand-off that is likely to continue into the new year.
“There’s clearly a marked increase in the quality of companies and the appetite to invest in them, it’s about agreement on price; it’s much harder to close a deal,” Mr Campbell said.
He added the slowdown had been largely felt in private fundraising, rather than M&A, which remained steady in the second half of the year, and had affected smaller start-ups that are often backed by angel investors more than later-stage companies raising money from institutions.
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