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London-based companies received 80.6% of all venture capital investments last quarter in a sign that regional hubs continue to be overlooked by investors.
Data released by KPMG’s Venture Pulse report shows that £5.8bn of VC investments between April and June went to companies based in London, while £1.4bn was invested across all the other regions around the country combined.
Among the top regional deals was the £84m investment into Manchester-based Freedom Fibre. The company aims to bring fibre connection to two million buildings in the Northwest.
Overall, the £7.2bn raised by UK companies was a decline from the £8.5bn raised in the first quarter in a sign that soaring inflation, rising interest rates and macroeconomic uncertainty from the war in Ukraine is being felt by investors.
However, VC investment for the quarter remained up on the £7bn raised in the year-ago period. Since the start of the year, VC investors have injected £15.7bn into UK companies.
“Despite the global downturn, the value of VC investment in UK businesses continued at a steady pace in Q2 2022. UK businesses have raised over £1.2bn more in the opening half of this year than where we were at this time in 2021,” said Warren Middleton, lead partner at KPMG’s Emerging Giant Centre of Excellence.
It was a gloomier outlook for corporate venture capital investment, which decreased from £4bn in the first quarter of the year to £2.2bn in the following quarter.
UK venture capital deal volume saw a big decline, with 667 deals occurring in the last quarter, the lowest since Q2 in 2018. Deals for the first half of the year saw an 11% drop compared to the first half of 2021.
Middleton added: “Continued challenging economic conditions could hamper levels of VC investment for the remainder of this year and there are already some red flags on the horizon as the volume of UK deals being done in the first half of 2022 is down more than 11% year on year.”
The UK is not alone in a decline in funding. Global venture capital funding fell to £100bn this quarter from £138bn in Q1.
Some sectors have been affected less by the downturn than others, with KPMG observing that investors have been turning to ‘safer’ bets such as finech.
Despite regions outside of London representing a smaller majority, it was found earlier this year that startups based in Manchester, Leeds and Sheffield had raised a total of £1.3bn in the last five years.
JD Sports Fashion’s search for a CEO is over and it has chosen a seasoned retail executive with experience in a wide range of categories, both in the UK and abroad, it was claimed on Tuesday.
Sky News said that the firm is “close to finalising the appointment of Regis Schultz as its new chief executive”. City sources told it that an official announcement could happen within days.
It would mean French national Schultz stepping into the role formerly filled by ex-company chief Peter Cowgill. He led JD for many years and oversaw its expansion to become Britain's biggest sportswear retailer by market value and a force on the global retail stage. But he stepped down last month after dissatisfaction over the firm’s corporate governance as he combined both the chairman and CEO roles.
Schultz joins from Dubai retail business Al-Futtaim Group, but also held senior posts at British DIY retailer B&Q, as well as at France’s Monoprix.
The depth of his experience underlines JD’s importance as a global retailer.
UK consumer credit and debit card spending rose 6.2% year-on-year last month as consumers spent more on entertainment and international travel. But Britons are worried about rising living costs and are “becoming more selective about their spending and feeling less able to live within [their] means each month”.
That’s according to Barclaycard, which processes almost half of UK card spending.
And it said that while spend on essential, utilities, holidays and other leisure activities (such as trips to the cinema or dining out) all rose, spending on household goods saw a noticeable drop. That category fell 5.1% compared to the previous month.
Overall spending on non-essential items was up 7.1% year-on-year, although this was a noticeably lower level of growth than seen in May (11.6%) and April (21.2%), continuing the downward trend seen over the last few months.
Some key retail sectors managed to stay in positive territory for the month with clothing up 2.4%, while sports and outdoor retailers rose 4.9%, pharmacy/health/beauty was up 1.9% and department stores rose 1.8%.
This was boosted by consumers socialising, enjoying more time outdoors in the sunshine and preparing for summer holidays and events.
But what about those concerns for the future? The monthly report always comes with a consumer survey and this showed that 91% of people are concerned about the negative impact of rising household bills on their personal finances.
Consumers are also feeling less optimistic about their ability to live within their means (66% versus 71% in May), and their ability to spend on non-essential items (48% versus 54%). In addition, confidence in the future of the UK economy has decreased slightly to 25%, down from 27% in May.
Travel platform Holibob has raised $12m (£10.1m) in its Series A investment round, led by previous investor Ryan Howsam, the founder and CEO of travel insurance provider Staysure.
Founded in Scotland but now London-based, Holibob is a business-to-business marketplace that uses artificial intelligence (AI) to find activities for tourists while on their travels.
It partners with travel companies including Amadeus, Kayak, and SecretEscapes to create bespoke holiday experiences.
The startup was founded in 2019 by Angus Hardy and Craig Everett. In April, it acquired TourismSolved.
“With the expertise, we have in place and the infusion of capital from this funding round, we’re well-positioned to realise our vision of helping the tours and attractions industry effortlessly connect the right products with the right travellers at the right time,” said Holibob CEO Craig Everett.
In addition to the new funding, the company has gained access to a credit facility. Holibob will use the investment to improve its AI, marketing, content optimisation and consumer experiences.
Holibib said its revenue has grown by 600% over the past six months, with the company likely to have benefitted from the uptick in international travel following the lifting of many Covid-19 restrictions.
Ryan Howsam, investor, Holibob said: “The team’s proven ability to partner with, and more importantly drive revenue for, leading travel brands made it an easy decision to double down on my support for them and their business model, including the extension of a credit line that will allow the team to focus on innovation and execution rather than further fundraising.”
XR Games, a Leeds, UK-based independent games studio and virtual reality (VR) developer, raised £5.9m ($7m) in funding.
The round was led by existing investors act media ventures, Praetura Ventures and Maven.
The company intends to use the funds to grow its team, to move to a larger studio in the city centre, as it invests in intellectual property (IP), to develop new games, and research into VR and augmented reality (AR) technologies.
Led by Bobby Thandi, Founder and CEO, XR Games is an independent games studio and developer of virtual reality (VR) games working with major partners and internationally-renowned brands, including Sony Pictures VR and Rovio Entertainment, to create games for the rapidly-growing VR and AR market. Its first title ‘Zombieland: Headshot Fever,‘ was launched in 2021.
XR Games initially raised £1m in a round led by act media ventures (formerly known as ACT Capital Partners), and subsequently raised £1.5m in a round led by Praetura Ventures alongside act media ventures in 2019. XR Games raised a further £1.5m in 2021 as part of an investment round led by Maven utilising both Maven managed VCT Funds and NPIF – Maven Equity Finance, (Maven) which is part of the Northern Powerhouse Investment Fund (NPIF), with backing from act media ventures.
In less than a year, the studio has tripled its headcount to employ more than 85 people and continues to grow. In March, XR Games acquired specialist VR game studio Fierce Kaiju to expand its games portfolio and scale its teams.
BNPL giant Klarna is expected to announce soon that The Canada Pension Plan Investment Board (CPPIB) is to become a shareholder. It’s to unveil a new $800m fundraising, a media report claims.
Sky News said the fundraising will value the firm at around $6 billion, despite the business having a valuation of more than $45 billion just two years ago.
This reflects less confidence by investors in fast-growing technology-based businesses since the pandemic and also the likelihood of greater regulatory scrutiny of the BNPL sector.
The company, which is based in Sweden, could announce the new money as early as this week, with a report saying that existing investors, such as Sequoia Capital and Silver Lake, and other new backers have taken part in the fundraising round.
SoftBank's Vision Fund is also an existing investor in the company, although it's unclear whether it's taking part in the new round.
Sky added that the Abu Dhabi state investment fund Mubadala had also been in talks with Klarna in recent weeks about taking part in the capital-raising, and that the $800 million it's believed to have raised is larger than had been expected.
Neither Klarna nor CPPIB have commented on the development yet.
Nick Beighton left ASOS last autumn and he’s certainly been in demand elsewhere since then. Not long after he was announced as Chairman of Secret Sales, it now emerges that he’s being brought in to run Matchesfashion, replacing CEO Paolo de Cesare.
At least, that’s according to Sky News. It said he would be unveiled as the new chief executive at the luxury online and physical stores retailer on Tuesday.
Matches is controlled by Apax Partners – which bought its majority stake five years ago – and the report said that it's looking to improve the performance at the business. It added that the appointment of the new CEO is likely to come with an injection of further capital into the firm by Apax. However, Sky added that details of the funding hadn't been finalised as of Monday.
Paolo de Cesare took over in the hot seat only 10 months ago and is now reportedly leaving to pursue other opportunities. Beighton would therefore be the fourth head of the company in under three years.
The retailer has faced challenging times in recent periods, not only because of the pandemic, but also as a sales boom post-pandemic has faltered.
Beighton certainly has experience of the ups and downs of online fashion retail and steered ASOS through both some turbulent times as well as more buoyant periods.
However, he left with immediate effect last October as the company said new leadership would “underpin delivery of the next phase of its global growth strategy”. It only recently announced a permanent replacement for him.
It seems De Cesare had already started making headway at Matches, having overseen a move from double-digit declines to double-digit growth in recent months. He's also scaled back the heavy discounting that had been seen at the company.
It’s unclear how this fits in with Beighton’s new part-time role as Chairman of Secret Sales. He was announced as chair of the fast-growing business just over a month ago.
The latest figures from the IMRG Capgemini Online Retail Index show that times are still tough for e-tailers at the moment, although the fashion sector remains the standout performer and continues to be in positive territory.
The index, which tracks the online sales of more than 200 retailers, showed overall e-tail growth was negative again last month with a 2.3% fall year-on-year.
That said, it was the highest result the index has seen so far this year and significantly better than the three-, six-, and 12-month averages.
And when compared to May, the index also showed 1.5% sales growth. But before we get carried away with the good news, we have to bear in mind that a reading between 2% and 5% is more typical for this time of year.
So while the freefall has eased slightly, the overall picture is still reasonably weak.
While that 2.3% year-on-year drop isn't too bad in isolation, it comes after an 8.6% fall this time last year, so the overall picture is poor.
The monthly report also said that the Average Basket Value (ABV) dropped slightly for the first time in five months, from £150 to £145, “suggesting a degree of stabilisation”. Yet the report said the basket spend remains very high historically.
Of course, the fall in basket size this time could also suggest consumers cutting back on their spending in June at a time when prices are rising fast. Basket sizes could be expected to grow simply because of inflation had shoppers been purchasing at the same rate as in May.
At a category level, the trends seen throughout H1 continue to dominate, with all categories reporting negative growth aside from clothing. In fact, clothing continues to recover from the pandemic at +4% year to date and +11.3% year-on-year, perhaps buoyed by the uptick in in-person events and summer travel.
Andy Mulcahy, Strategy and Insight Director at IMRG, said: “It speaks volumes that a decline of 2.3% feels quite good in the context of 2022. The cost-of-living crisis is having a profound impact on customer behaviour in ways that set it apart from the pandemic.”
Nick Beighton left ASOS last autumn and he’s certainly been in demand elsewhere since then. Not long after he was announced as Chairman of Secret Sales, it now emerges that he’s being brought in to run Matchesfashion, replacing CEO Paolo de Cesare.
At least, that’s according to Sky News. It said he would be unveiled as the new chief executive at the luxury online and physical stores retailer on Tuesday.
Matches is controlled by Apax Partners – which bought its majority stake five years ago – and the report said that it's looking to improve the performance at the business. It added that the appointment of the new CEO is likely to come with an injection of further capital into the firm by Apax. However, Sky added that details of the funding hadn't been finalised as of Monday.
Paolo de Cesare took over in the hot seat only 10 months ago and is now reportedly leaving to pursue other opportunities. Beighton would therefore be the fourth head of the company in under three years.
The retailer has faced challenging times in recent periods, not only because of the pandemic, but also as a sales boom post-pandemic has faltered.
Beighton certainly has experience of the ups and downs of online fashion retail and steered ASOS through both some turbulent times as well as more buoyant periods.
However, he left with immediate effect last October as the company said new leadership would “underpin delivery of the next phase of its global growth strategy”. It only recently announced a permanent replacement for him.
It seems De Cesare had already started making headway at Matches, having overseen a move from double-digit declines to double-digit growth in recent months. He's also scaled back the heavy discounting that had been seen at the company.
It’s unclear how this fits in with Beighton’s new part-time role as Chairman of Secret Sales. He was announced as chair of the fast-growing business just over a month ago.
The UK saw its lowest like-for-like sales growth last month since February 2021, the latest BDO High Street Sales Tracker (HSST) showed on Friday. However, the fashion sector stood out as strong.
Even with fashion’s ongoing good performance though, BDO’s head of retail and wholesale, Sophie Michael, said that with consumer confidence at historically low levels, real wages falling to a 20-year low and interest rates set to rise further, there are few signs of encouragement for retailers.
And this week’s resignation-but-not-leaving-yet announcement by Prime Minister Boris Johnson means the stability and clear direction that retailers (and the customers) are looking for from government is unlikely to be forthcoming any time soon.
So what did the report actually tell us? Well, on the surface, it didn't look that bad. Total like-for-like (LFL) sales increased by 8.4% — including sales through physical stores and online — against June 2021. But as mentioned, this was the lowest rise for 16 months. And much of that growth will have been about inflation, which is running at historically high levels after decades of low-single-digit price rises.
Total non-store LFL sales were unimpressive at just 1.6% higher in June. While this is the online retail sector’s third consecutive positive result, it’s a very disappointing performance given that it comes after fairly low growth of 8.2% in June 2021. It most likely shows that online has reverted back to a level of normality post-pandemic and underlines how fully consumers have embraced the return to physical shopping.
The month started particularly slowly, as total LFL sales grew by just 4.65% in the first week of June, which included the Platinum Jubilee bank holiday. They rose 7.63% in the second week, and 7.3% in the third week. The final week of the month saw the strongest LFL growth, with sales jumping by 18.61% above those recorded in 2021.
And the fashion sector was a big contributor to the increases. Despite a slow start in early June, it saw total LFL growth of 15.2% compared to a surge of 73.7% this time last year on the back of the big reopening post-lockdown.
Of course, fashion has continued to be buoyed by the fact that many consumers need to update their wardrobes in ways that they haven't for several years. That means they’ve been buying clothing and footwear for occasions, such as a return to the office, a holiday or social event.
But one category that had boomed during the pandemic – homewares – had a tough month with a fall of 8.8% this time. It was the third negative month for the category this year.
Sophie Michael said: “The fashion sector has undoubtedly been boosted by consumers refreshing their wardrobes for summer holidays. However, the weak sales growth for online retailers and the negative results for the homewares sector are key indicators that consumers are tightening their purse strings on discretionary spend and in particular on big-ticket items.
“Retailers who have accumulated high levels of stock are now faced with a real challenge: with their own cost base rising, they cannot afford to discount it to increase sales, but neither can they afford to sit on unsold product. Effective management of stock levels and working capital will be essential for retailers to trade successfully through this period of unprecedented challenge.
“Ultimately, however, retailers will be looking to the government to use the levers at its disposal to get inflation under control, ease the cost-of-living crisis and create the economic conditions where the retail sector can flourish.”