Early-stage investments made up three-quarters of UK VC term sheets last year while the value of late-stage funding rounds fell, fresh figures have found, highlighting the challenges facing mature companies seeking to scale.
Seed investments alone accounted for a third of UK funding deals in 2024, according to findings from the annual term sheet guide from HSBC Innovation Banking.
The study of almost 600 completed term sheets from last year found a heavy weighting towards early investments, which only accounted for 58% of deals in 2021, a bumper year for blockbuster funding rounds.
The average value of seed and Series A rounds was found to be at the highest level since 2021, at £4.1m and £17.9m respectively.
This is contrasted with the value of Series C+ rounds, which fell from an average of £211m in 2023 to £192.9m last year.
The report argued this was down to a notable fall in deal syndication – rounds in which a group of investors and lenders are pooled together – which decreased from 42% of investments in 2023 to 33% in 2024.
This could suggest a heightened competition for new deals, with VCs writing larger individual cheques as sole investors.
Glen Waters, head of early-stage banking at HSBC Innovation Banking noted that “headline funding numbers never tell the full story. Behind every investment is a complex negotiation, with commitments required from both investors and founders”.
The bank’s findings also revealed continued investor interest in AI, with automation technology startups making up 14% of 2024 deals, up from 9% the previous year, putting the nascent sector on a similar footing to fintech and life sciences, which generally dominate UK investors’ attention.
Read more: Returns on AI funds last year were just 2.5%, research finds
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