3 November 2022

The UK's Most Successful VC-Backed Exits

The UK’s Most Successful VC-Backed Exits 03 November 2022 VC-backed exits are an important component of the UK’s high-growth business landscape. Exit events give startup founders the opportunity to move on from a company, potentially to start a new venture or become angel investors, whilst providing liquidity to investors, which can then be reinvested into … The UK’s Most Successful VC-Backed Exits

Words Beauhurst Press Office

VC-backed exits are an important component of the UK’s high-growth business landscape. Exit events give startup founders the opportunity to move on from a company, potentially to start a new venture or become angel investors, whilst providing liquidity to investors, which can then be reinvested into the early-stage ecosystem. While venture capitalists are sometimes criticised for encouraging their portfolio companies to exit too soon, these exit routes can open up a lot of opportunities for further growth.

A typical VC exit strategy involves exiting when stock markets are stable, interest rates are low, and valuations and investor confidence are high—to maximise return on investment. So it will be interesting to see how the UK’s exit market fares amidst the current macroeconomic climate. For now, we explore recent trends in VC exits below, and take a look at 10 of the most successful in the UK to date.

VC exit trends in the UK

In our research with Triple Point, we reported a significant increase in both the number and value of exits by high-growth UK companies over the past decade—a clear sign of a healthy and maturing ecosystem. But what about exits by VC-backed businesses in particular?

Venture capital exits are when a private company with investment from venture capital funds exits the private market, either through an initial public offering (IPO) or acquisition. An IPO occurs when shares in a private company are listed on a stock exchange for the first time. Whereas, an acquisition occurs when a company sells a majority stake to a fund or another business.

Over the past decade, 215 high-growth UK companies have undergone an IPO, of which 36% are known to have received investment from a private equity or venture capital fund. In this same time period, 4,923 businesses have been acquired, of which 16% are known to have been PE or VC backed.

The UK venture capital market has grown considerably in recent years. Besides slight dips in 2017 and 2019, the number of acquisitions of VC-backed companies taking place in the UK has been growing steadily each year, from just 14 in 2012 to a record 171 in 2021. With uncertainties surrounding Brexit and the COVID-19 pandemic delaying exit plans for many companies in 2020, there was a huge surge in acquisitions last year. A similar peak can be seen in last year’s IPO data, albeit on a smaller scale.

Top 10 VC-backed exits in the UK

Below, we’ve ranked the UK’s most successful exits by high-growth companies that secured investment from private equity or VC funds—based on their value at exit.

For the purposes of this comparison, we looked at market capitalisations at IPO and valuations at acquisition. It’s worth noting, however, that when undergoing an IPO, some businesses may not list all of their shares on the market, so their market cap may not reflect the company’s full value. Similarly, some acquisitions may involve the transfer of non-monetary compensation, such as shares, which may not be reflected in the company’s valuation.

In the end, all 10 companies that made it onto our ranking exited the private market via an initial public offering. This is unsurprising, since UK businesses that IPO often achieve much larger valuations at exit than those that are acquired. Having said that, acquisitions are far more secretive in nature, and valuation data is limited for many of these transactions—such as Kymab’s £800m acquisition by Sanofi last year and Skyscanner’s mammoth £1.40b acquisition by Ctrip back in 2016.

Wise (formerly TransferWise) develops a platform that allows individuals and SMEs to transfer money abroad using real exchange rates. The platform’s features include automated identification verification, online and in-app technical support, and predictions of when money transfers will arrive. The London-based fintech company was founded in 2010 by Estonian entrepreneurs Kristo Käärmann and Taavet Hinrikus.

Wise secured equity investment for the first time in February 2011, in an unannounced funding round. Over the next decade, it raised nine further rounds, taking its total equity funding to £305m. The company’s long list of investors included numerous private equity and venture capital firms, such as Index Ventures, LocalGlobe, Seedcamp and Valar Ventures. Wise listed on the London Stock Exchange in July 2021, with a market capitalisation of £7.96b, making it the highest-value VC exit in the UK so far.

THG (The Hut Group) is a Manchester-born e-commerce company. It offers online sales of luxury items, licenced and customised products, dietary supplements and cosmetics, under its own brand and those of third parties. Through its Ingenuity division, it also offers third parties an end-to-end e-commerce service. Founded in 2004, THG operates out of nine production facilities and 18 fulfilment centres, which ship to 195 countries worldwide.

Prior to its IPO in 2020, THG acquired 20 other businesses and secured £476m of equity investment, across 12 funding rounds. The company’s backers included venture capital funds Artemis and Balderton. THG reached unicorn status in early 2016, with a billion-dollar valuation, and its public market debut saw it float on the London Stock Exchange at 500p per share. The IPO raised £920m in total, with a market capitalisation of £4.85b.

FarFetch is a global online marketplace for independent fashion boutiques and major designer brands. The company works with over 1,000 retailers to offer their products on its platform. FarFetch operates six brands: The Farfetch Marketplace, Farfetch Platform Solutions (FPS), Farfetch Store of the Future, and acquired companies Browns, Stadium Goods, and New Guards.

Founded in 2007, FarFetch raised more than £516m in equity investment prior to its IPO, across nine funding rounds. The e-commerce unicorn received VC investment from a large number of firms, including Advent Technology, Eurazeo, Felix Capital, Headline, Index Ventures and Vitruvian Partners. In September 2018, FarFetch underwent a £514m ($672m) IPO, listing on the New York Stock Exchange with a stock price of $20 per share and a market capitalisation of £4.44b ($5.80b).

Oxford Nanopore Technologies develops a range of portable DNA and RNA sequencing devices capable of characterising epigenetic modifications. Its technology can be used in various fields, including scientific research, personalised medicine, crop science, security and defence, and environmental applications. The genomics company was founded in 2005, as a spinout from the University of Oxford.

Ahead of its IPO last year, Oxford Nanopore Technologies raised £856m in equity funding from investors, across 17 rounds. It was also awarded a £199k Innovate UK grant back in 2007. The unicorn company received venture capital investment from the likes of Woodford Investment Management and Amgen Ventures. In September 2021, it listed on the London Stock Exchange, at 425p per share. The IPO raised £350m, with a market capitalisation of £3.38b.

Funding Circle is an online marketplace which enables savers and investors to directly lend to small businesses and allows companies to borrow money from various sources through an auction system. The fintech company was founded in 2010, and operates out of offices in London, Amsterdam, Berlin and Denver.

Prior to its exit event, Funding Circle attended Tech Nation’s Future Fifty accelerator programme (from 2013 to 2015) and secured £256m in total equity investment, across seven fundraisings. The company received backing from several private equity and venture capital funds, including Accel, Global Founders Capital, Index Ventures and Ribbit Capital. It also acquired German lending platform Zencap in 2015.

Funding Circle’s £300m IPO, in September 2018, saw it float on the London Stock Exchange at 440p per share. The company had a market capitalisation at IPO of £1.50b.

Online takeaway ordering service Just Eat was founded in 2001. Prior to exiting, it expanded internationally through its acquisition of five other companies, including France’s Alloresto and Spain’s SinDelantal. Just Eat now operates in 22 countries globally, through various single-brand identities, such as GrubHub in the United States, and Menulog in Australia and New Zealand.

Just Eat raised a total of £79.8m in equity funding, across three rounds. The company’s early backers included Venrex Investment Management and VC firm Index Ventures, while later-stage rounds included new investors Greylock Partners, Redpoint Ventures and Vitruvian Partners. Just Eat listed on the London Stock Exchange in April 2014, in a £360m IPO, at a share price of 260p. The company reached a market capitalisation of £1.47b.

Orchard Therapeutics develops gene therapy treatments for individuals with rare, life-threatening diseases. The innovative biotech company was established in 2015, as a result of a collaboration between university commercialisation company UCLB and venture capital firm F Prime Capital Partners. Its technology is based on research produced by Professors Bobby Gaspar and Adrian Thrasher at the UCL Institute of Child Health.

Prior to exiting, Orchard Therapeutics was awarded a £20m innovation grant from the California Institute for Regenerative Medicine, and raised £221m in additional funding, across three equity rounds. In October 2018, the academic spinout floated on the NASDAQ stock market, at a listing price of $14 per share. The healthcare company completed its £177m ($225m) IPO at a market capitalisation of £950m ($1.21b).

ZPG (also trading as Zoopla) operates a holding company for a number of proptech businesses that develop digital platforms for the property market. These include Zoopla, uSwitch, PrimeLocation, money.co.uk and hometrack. Additionally, ZPG provides switching services, property advertising, display advertising and data services to real estate agents, letting agents, and new home builders.

Founded in 2008, the startup initially raised two rounds of equity funding (in 2009 and 2010) with venture capital funds Octopus Ventures and Accomplice. It then made multiple acquisitions (of Digital Property Group, Globrix and Vizzihome) and attended the Future Fifty accelerator, before listing on the London Stock Exchange in June 2014. At IPO, ZPG had an exit value of £919m.

Founded in 2007, pharmaceutical company Immunocore develops drugs to treat cancer, viral infections and autoimmune diseases. By engineering biospecific human T cell receptors (TCRs), Immunocore’s treatments can help get around the limitations of the body’s immune system and the limited success of current therapies.

Immunocore raised £410m in equity investment ahead of its IPO, across 12 funding rounds. The company’s backers included private equity and venture capital funds such as Woodford Investment Management and General Atlantic. It was also awarded a £2.40m innovation grant in 2013, through the Biomedical Catalyst Late Stage funding competition, to support its development of targeted treatment for prostate cancer.

In February 2021, Immunocore became a public company when it listed on the NASDAQ stock exchange at a listing price of $26.0 per share. The £189m ($258m) IPO was completed with a market capitalisation of £806m ($1.10b).

MADE is an online furniture retailer that enables customers to cut out the middleman. The company aims to offer designer furniture at up to 70% discount, by removing the warehouses and connecting consumers directly with furniture makers. Founded in 2010, the e-commerce company now operates in seven European locations, serving around 100k customers, and has offices and warehouses in the UK, China and Vietnam.

Prior to its exit last year, MADE secured £92.5m in equity investment, across five funding rounds. The company received backing from VC funds including Eight Roads Ventures, Partech, and PROfounders Capital. In June 2021, MADE raised £100m through its IPO on the London Stock Exchange, which saw it reach a market capitalisation of £775m.

At the time of writing, MADE has just announced that it will no longer be taking orders on its website, after failing to find a buyer for the business. The company has struggled with supply chain and profitability issues in recent months, and is now set to appoint administrators, as its share price fell to just 0.5p last week—down from 200p when it IPO’d just a year ago.