Let’s not pretend that it’s been an easy time for those in the VC industry, or indeed those of us who support the industry. We’ve worked with the VC community since our inception in 2010 and hiring demand has always been constant, but 2023 was a tough year. Whilst business development and marketing hires were robust (not great volumes), but robust as firms reviewed their capital raising strategies. There was very little hiring in investment teams. Exits have been very hard to come by and many VC firms have been in a holding pattern for far longer than they expected to be. This can be hard to manage and can cause talent issues. People who work in the VC industry are typically ambitious and struggle when they feel they aren’t progressing. However, things do seem to be much more positive at the moment. There are certainly some concerns about the environment for non-doms and any potential changes to carried interest rules, but I do think firms are now starting to think about recovery and what that means for them.

Data this week though has shone a light on what a great place the UK is for VC. According to Dealroom, UK start-ups and scale-ups raised £7.4 bn during the first six months of the year (up 16% on the same time last year). This accounted for one-third of all VC investment in Europe for the first six months. UK tech companies raised more money than those in France and Germany combined and five times their peers in Switzerland. Cambridge alone is now in Europe’s top 10 investment destinations. The British Business Bank also publishing data that the UK is now the world’s third-largest venture capital market. That’s not to say that this is an entirely British success story, many of our placements are non-UK nationals – particularly in investment teams . The VC talent pool in London is international, but the UK is clearly THE place to build a career in VC for professionals who want variety and choice of employers. It’s also a great environment for investment managers to get board experience early in their careers. Regardless of who is in government, the industry is worth cherishing and not diminishing.

What has been interesting to see as a partner to the industry is the regionalisation of investment and talent. It started with firms hiring more Business Development Managers in the regions, but now the requirement to have investment talent in each region is growing. With every region of the UK now receiving significant investment, and you can’t ignore the good work of the British Business Bank in this diversification, having investment professionals closer to portfolio companies, and on the ground to originate investments, is a continuing trend.

Whilst I don’t subscribe to the view that UK listed companies are doomed, it does seem that investors want more private markets exposure. Asset Managers have been growing their capabilities in these areas and there does seem to be the will from governments to improve access to private investments. This all should provide VC firms with fresh capital and investors will return as the cost of living dissipates and investment appetite improves.

We feel very positively about the sector. Firms will start to position themselves for recovery before it becomes obvious to their peers, and therefore the hiring market should be materially better in the second half of the year.