It’s the uncertainty, stupid: VCs cool off UK targets
April 20, 2017
UK Prime Minister Theresa May has called for a snap general election, to be held on the 8th of June. Citing the UK’s national interest, she also mentioned that securing a parliamentary majority—the very likely outcome—would give her a stronger hand in Brexit negotiations with the EU.
While predicting the outcome of the two-year-long negotiations is impossible at this early stage, what is clear is that it has caused uncertainty with investors. Indeed, while the pound bounced back following Tuesday’s announcement, this is just a blip. Year-to-year, sterling is down over 10% on the dollar.
This is also affecting venture activity, and deal numbers bear this out. Since July 2016, a week after the referendum, there have been 1,144 completed deals for UK companies, per PitchBook data. This compares with 1,962 deals in the year leading up to the referendum.
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While it’s true the timeframes for comparison are slightly different, the chart above shows a clear downward trend. And to make par with last year, it seems unlikely that more than 800 deals will be made during the next eight weeks.
You can catch all of our previous Brexit coverage here.