Investors pause investment in Createch
Investment in CreaTech businesses paused over the summer - probably because of disruption to the entertainment industry from the pandemic, according to a review of UK growth capital investments by Moore Kingston Smith, the accounting and business advice group.
An estimated £982m of capital was raised by 206 UK businesses, reports the survey which looks at investments of between £1m and £20m made into privately-owned UK businesses. This figures represents a 26 per cent quarter on quarter increase in the amount of capital raised. The trend was underpinned by the Coronavirus Future Fund, launched by the government to match private funding, which has resulted in £320m of funding.
However, investment in the CreaTech category did not keep pace with the trend in the overall market, with £87m raised during the period, down from £149m in the previous three months. The average deal size in Q3 was £3.78 million,19 per cent down on Q2’s £4.66 million. However, there are grounds for optimisim about a pick-up in the months that followed.
Paul Winterflood,Corporate Finance Partner at Moore Kingston Smith, said: “Early signs show that activity has picked up
significantly post-summer as disrupters established themselves so we are optimistic of a much stronger
Q4 and start to 2021.
“After a relatively strong Q2, investment in the CreaTech sector was slow over the summer, we suspect partly because of the level of disruption to the entertainment industry."
(Above: CreaTech data for Q3 2000. Image: MKS, 2020)
Among the companies that succeeded in attracting investment were the UK virtual reality fitness provider FitXR, which secured $7.5m funding to expand its international operations and develop games and services that encourage people to stay fit using platforms such as PlayStation VR and Oculus Rift.
UK games companies 110 Industries, which creates scripts and concept art for games, also attracted $20m from Roman Abramovich's investment vehicle Norma Investment, GEM Capital and the film producer, Sergey Kornykhin.
Media platform Curio also raised $9m in a Series A investment round.
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