A Summary of First-Time Deal Trends in 2022

Sam Peckett, 07 September 2023

In our latest collaboration with SFC Capital, we delved into the trends of seed-stage investment and first-time deals for UK companies from 2013 to 2022.

Below is a summary of the report. Take a look at the full report to get all the details.

Key Findings

  • In 2022, seed-stage companies in the UK experienced a 27.6% decrease in first-time deals compared to the previous year. This suggests that the bump in 2021 was due to an atypical year for startups, driven by COVID-related stimulus packages.
  • The data shows that 2022 marked a return to the downtrend in the number of deals for seed-stage companies seen since 2018.
  • The Seed Enterprise Investment Scheme (SEIS) plays an irreplaceable role within the UK’s funding environment. A substantial majority of first-time deals occur through SEIS, underlining its significance in nurturing emerging innovation.
  • The introduction of SEIS 2.0 in April 2023, which allows startups to raise more capital and investors to contribute more, will make sure SEIS is suitable for today’s startup and investor needs.

First time deals and SEIS

In 2022 we saw a drop in first-time equity deals compared to the previous year, while there was a small increase in second-round and subsequent deals. This suggests a possible shift in investor behaviour, moving away from new investments to reaffirming existing holdings.

Despite market challenges since 2018 and a drop in number of first time deals and volume of investment, SEIS has had a huge impact on first time deals. Since its introduction in 2013, £1.33b has been invested across 15.5k deals.

Seed-stage top investors

SFC Capital topped the ranking of investors in first-time seed-stage deals in 2022, participating in 59 such deals. Crowdfunding platforms Seedrs and Crowdcube also continued to play a prominent role in facilitating seed-stage companies’ first deals.

Key takeaways

The last few years have been challenging for UK companies, including that at seed-stage. Accepting 2021 as an anomaly, first-time equity deals have dropped steadily since 2018. In 2023 and beyond, changes brought in through SEIS 2.0 should play a pivotal role in the UK’s startup ecosystem through adjustments to fundraising caps, gross asset limits, and annual investment limits.

Take a look at our full report for more analysis and data.

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