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<p>Northern Tech Investment Q1 2017 March 2017 41 £165.7m 32 Growth Total value Completed investments of growth acquisitions investments Q1 2017 investment demonstrated a growing confidence in Northern tech businesses from both local, national and international investor groups. With more than £165m invested, Q1 was among the Northern tech sector’s most successful single quarters in recent years. The most notable investment was the £83m raised by Atom Bank. Based in Durham, Atom is the UK's first mobile only bank. It is leading the way in disrupting a sector long dominated by large, well established players who’s size and traditional structures can sometimes make it difficult to keep pace with technological change. Beyond Atom Bank’s fundraising, the remaining £83m invested in Northern tech businesses is more than the last two quarters of 2016 combined. M&A activity in Q1 2017 was also markedly higher, with 32 transactions, more than double both Q3 and Q4 2016. At the close of March, Tech North debuted the Northern Tech 100, a ranked list of the fastest growing tech companies in the region. At the top of the list is Wakefield based The Car Buying Group, a non-traditional service utilising technology to make its mark in the second hand car marketplace; they grew at a rapid rate of 191% over the past year, emphasising the impact e-commerce is having on traditional retail. Some of the businesses in this Q1 Investment and M&A newsletter also featured in the ranks, such as Tyres on the Drive, The Floow, and UKFast. Businesses developing enterprise software made up the largest share, with 35 making the top 100, but the diversity of the region’s tech scene still showed through, with many companies operating in younger and more niche sub-sectors such as IoT, AI and VR also gaining recognition. Also released in Q1, Tech City UK published its 2017 report on the state of the digital nation. It further highlighted that the North is quickly building itself up as a vitally important digital hub and innovation leader. Consequently, research is now showing that Manchester has the second highest number of people employed in digital businesses, and Leeds has the fifth highest average advertised salary for jobs in the sector. Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 2 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Featured investments Push Doctor Push Doctor’s founder and CEO Eren Ozagir on their £3.5m investment: “At the close of 2015 we completed a Series A round of funding. This most recent round of investment was a £3.5m top up from the same pool of investment partners. The funding will allow us to continue to invest in the product which is critical for our effort to further advance and run a market leading service capable of meeting modern patient needs and offering GPs a new avenue to provide care. Healthcare shouldn’t be a rigid, reactionary process, it needs to be a comprehensive, flexible, positive experience. By continuing to perfect our product, we are in the position to transform healthcare into an everyday engagement that consumers can enjoy and take advantage of easily. Over the next 18 to 24 months we plan to leverage this most recent product investment to build out our brand and bring a convenient, quality healthcare service to a broader patient population - that means everyone.” Atom Bank Atom Bank’s founder and Chairman Anthony Thomson on its £83m investment from current investors BVBA, Toscafund and Woodford Investment Management: “We are very pleased with the response we have had from investors. Our customers benefit from the backing of highly reputable investors who are supportive of what we are doing. This is a great vote of confidence in our growth prospects and plans for the future. With the work we have done so far we are just beginning to see how transformational our new approach to banking can be. There is so much more to come from Atom in the coming months and years." The Floow Founder and CEO of telematics technology provider business The Floow, Aldo Monteforte, commenting on its £13m fundraise which included funds from China- based investment group Fosun and a re-investment from Direct Line Insurance: “Just five years from its foundation The Floow is now a leading provider of telematics data services to the global insurance industry, and today my management team and I are proud to have reached agreement for the completion of a meaningful financial investment that is aimed at accelerating the company’s momentum and global growth.” Cocoon Labs Sanjay Parekh, CEO and founder of Cocoon Labs – a business which utilises smart technology to bypass traditional home security – said this about its fundraise on Crowdcube: “I’m really proud that Cocoon has raised over £2.46m from more than 1,100 investors. It’s incredible for our team to know we have that many people supporting us in the next phase of Cocoon’s journey. The funds will enable us to expand our retail distribution, insurance partnerships and continue to improve our product offering for current and future customers,” Northern Tech Investment Q1 2017 Growth investments more than £10 million Category Company Description Investor(s)/ lender(s) Investment (£'000) Date Fin-tech Atom Bank plc Atom is developing a digital-only retail banking service. The company has also brought on board Will.i.am for marketing purposes, the deal would also give him a seat on the board and the option to purchase shares worth millions. BVBA, Toscafund, Woodford Investment Management 83,000 6-Mar-17 Data Analytics The Floow The Floow develops telematics analysis software for vehicle service and insurance companies. Direct Line Insurance Group PLC, Fosun, United Electronics Co 13,000 6-Mar-17 Med-tech Redx Pharma Plc Redx Pharma is a drug development and discovery company which focuses on small molecule therapeutics for tumour immunology, cancer stem cells, autoimmune disease, and anti- microbial resistance. Lanstead Capital, Other investors 12,000 9-Feb-17 Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 3 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Northern Tech Investment Q1 2017 Growth investments between £1 million and £10 million Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. Category Company Description Investor(s)/ lender(s) Investment (£'000) Date Med-tech Proveca Proveca is using the latest technology in developing drugs to treat chronic medical conditions in children. GM&C Life Sciences Fund, Kreos Capital 4,000 29-Mar-17 Telecoms & Connectivity Airangel Airangel provides public and guest WiFi systems for businesses, the hospitality industry, residential buildings and public spaces. Santander Corporate 1,700 28-Mar-17 Hardware Cocoon Alarms Cocoon is a smart home security system developer which was founded to bypass traditional home security, which the founders believe is too expensive and complicated. Crowdcube 2,460 27-Mar-17 Enterprise Software Sentric Music Sentric Music has developed an online music royalty management and licensing service. BGF 3,000 20-Mar-17 Mobile Applications LivingLens LivingLens has developed a platform which can transform spoken words from videos into searchable items. Angel(s) 1,300 15-Mar-17 Mobile Applications Push Doctor Push Doctor allows patients to have private GP appointments online, via a two-way video conversation. The company has a network of more than 7,000 UK-registered GPs, and has over the past year grown to become the UK market leader. Co-Investor Circle, Oxford Capital, Draper Esprit, Partech 3,500 27-Feb-17 Mobile Applications Survey Data Solutions Survey Data Solutions provides a smartphone application for customer feedback, consumer insights, customer experience management, and customer services management. Deepridge Capital 2,000 24-Feb-17 Enterprise Software Zaptic Zaptic's cloud solution simplifies the management and execution of frontline operations. Angel(s) Unknown, but known to be seven figures 21-Feb-17 Telecoms & Connectivity Telesis Telesis supplies businesses across the North West with communication packages including phone systems, calls and lines, mobile services and broadband. RBS 2,500 20-Feb-17 E-commerce, Consumer Clubhouse Golf Clubhouse Golf sells golfing equipment and clothing online. Yorkshire Bank, Foresight Regional Investment Fund 4,000 16-Feb-17 E-commerce, Automotive HelloCar HelloCar operates a peer-to-peer online marketplace for used cars, with the company taking care of the car checks, paperwork, insurance and finance. JamJar Investments 1,000 12-Feb-17 Med-tech SuperX SuperX aims to develop antibodies used against a target present in the blood coagulation process. Johnson & Johnson, Medicxi Ventures 8,800 9-Feb-17 Hardware Elstat Elstat is a provider of energy management devices for commercial beverage coolers. The company commercializes artificially intelligent refrigeration controllers for use in commercial refrigerat rs. Barclays 3,000 27-Jan-17 © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 4 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Northern Tech Investment Q1 2017 Growth investments between £1 million and £10 million Category Company Description Investor(s)/ lender(s) Investment (£'000) Date Enterprise Software Pitchero Pitchero is a Leeds based web development platform for sports clubs. It manages 12,000 websites and has a registered database of over 1.2 million members. ICM, Other unknown investors 3,100 24-Jan-17 E-commerce, Automotive Tyres on the Drive Tyres on the Drive allows customers to book online and have their tyres fitted on their own driveway or at work. Halfords, MMC Ventures, True Capital 8,000 19-Jan-17 Hardware Faradion Faradion is focused on the development and commercialisation of advanced, low-cost battery materials. Haldor Topsoe, Mercia Technologies, Seedcorn Finance 3,200 18-Jan-17 Telecoms & Connectivity Origin Broadband Origin Broadband provides internet services, supplying broadband and phone packages. The company also operates their own network and datacenter in South Yorkshire. Calculus Capital 3,000 9-Jan-17 Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 5 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Northern Tech Investment Q1 2017 Growth investments less than £1 million Category Company Description Investor(s)/ lender(s) Investment (£'000) Date E-commerce Land Trader Land Trader operates an internet platform which facilitates buying, selling and renting land. Northstar Ventures, Angel(s) 250 30-Mar-17 E-commerce, Consumer Poptop Poptop is an online platform designed to help find providers and quotes for event entertainment, for example musicians, comedians, event equipment. Northstar Ventures, Angel(s) 120 27-Mar-17 IT Services Intrasource Intrasource provides IT support, consultancy and hosting services. UK Steel Enterprise 150 22-Mar-17 Hardware NotesNote NotesNote is developing a device which can access, manage and utilise musical scores in a digital format Unknown 57 8-Mar-17 Media & Advertising Plotist Plotist operates an online platform which provides the tools for people to write and share stories. Entrepreneur First 10 7-Mar-17 Mobile Applications M14 Industries M14 Industries owns and operates online platforms to create niche-dating applications. Jenkins and Jones (from BBC's Dragons Den) 80 7-Mar-17 Ed-tech Tutora Tutora has developed online software that enables students to search and book expert and vetted tutors. Crowdcube 710 5-Mar-17 Med-tech Arcinova Arcinova delivers best in class technology services in the fields of contract research, development and small scale manufacturing to maximise effectiveness whilst minimising risk and overall cost. The Northumberland Development Company, FW Capital 810 20-Feb-17 Enterprise Software TouchRight Software TouchRight Software develops reporting software for landlords, letting agents, and other property professionals. Finance Yorkshire 50 14-Feb-17 Enterprise Software Activ Activ provides a range of software, hardware and telecommunications services to businesses. FW Capital 500 10-Feb-17 Fin-tech Chetwood Financial Chetwood Financial is developing an online-only bank. Welsh Government 750 10-Feb-17 Mobile Applications Digital Bridge DigitalBridge has developed an app that uses augmented reality to allow people to virtually decorate their rooms. Angel(s) 700 7-Feb-17 IT Services NuBlue Nublue develops and hosts e-commerce websites for national brands. Lancashire County Council Rosebud Business Finance Undisclosed 3-Feb-17 Data Analytics Refract Refract operates a video tagging platform. The software enables corporate users to record and upload video or audio content and add tags and notes to the timeline. This assists corporate clients in reviewing and analysing the performance of employees in order to provide feedback and establish learning plans. Mercia Fund, North East Technology Fund 350 2-Feb-17 Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 6 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Northern Tech Investment Q1 2017 Growth investments less than £1 million Category Company Description Investor(s)/ lender(s) Investment (£'000) Date Hardware Specialised Laser Products Specialised Laser Products operates a laser cutting business, offering a range of services including flame and laser cutting, forming, machining, grinding and fabrication. Finance Yorkshire 75 30-Jan-17 Med-tech BiVictriX Therapeutics BiVictriX develops therapies designed to treat blood cancer, using a dual-action antibody targeting method. Alderley Park Ventures, Finance Wales Angel(s) 500 19-Jan-17 IT Services Gaist Gaist provides technology consultancy and software development services to the highways, transportation, and emergency services sectors, specialising in mapping systems and geospatial referencing. Lancashire County Council Rosebud Business Finance 200 12-Jan-17 Media & Advertising Dexerto Dexerto develops a website for gamers that allows them to connect with one another and read gaming-related content on the site. Seedrs 207 8-Jan-17 Enterprise Software The Human Group The Human Group provides online recruitment services for businesses. Rivers Capital Partners Undisclosed 4-Jan-17 E-commerce, Consumer Perfect Getaways Perfect Getaways operates a website which allows the owners of holiday homes to interact directly with customers. Merseyside Special Investment Fund 50 4-Jan-17 Data Analytics queek'd queek'd develops an online dating comparison website that uses a quiz to determine which dating websites match the individual's requirements. Angel(s) 30 3-Jan-17 Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 7 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Northern Tech Investment Q1 2017 M&A transactions Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. Category Company Description Buyer(s) EV (£'000) Date IT Services NTE Communica- tions NTE provides telecommunications and internet hardware and services for businesses. MBO with HSBC Undisclosed 23-Mar-17 Enterprise Software Telux HD VoIP Telux has developed a VoIP product for resale, its servers have not gone down once in the last 12 months. Invosys Undisclosed 20-Mar-17 Media & Advertising GluePR GluePR is a digital commications company which operates using social, online and traditional platforms. W Communications Undisclosed 20-Mar-17 Media & Advertising Pixel Inspirations Pixel Inspirations provides digital signage and out of home media agency services to organizations in the United Kingdom and Europe. Internet Media Services S.A. Undisclosed 3-Mar-17 Hardware ObservIT ObservIT specialilses in the installation of wireless communications infrastructures. Ollycom Undisclosed 1-Mar-17 Enterprise Software Emergent Network Intelligence Emergent Network Intelligence develops software to support and improve business processes. An example is its Police Authorised Data Downloads, a solution that reduces the amount of time taken by an insurance company to be informed that one of their vehicles has been involved in a road traffic collision or recovered from being stolen. Verisk Analytics, Inc. Undisclosed 28-Feb-17 Med-tech Fine Industries Fine Industries engages in chemical manufacturing, contract chemical research, environmental services, facility management, and software development. Lianhe Chemical Technology 103,000 27-Feb-17 Media & Advertising weare79.co weare79.co is a digital creative design agency offering services including motion graphics, web development and general content creation and planning. Tall Undisclosed 24-Feb-17 E-commerce, Automotive Contract Vehicles Contract Vehicles provides commercial vehicle contract hire and fleet management solutions. LBO with Bridgepoint Advisers Undisclosed 20-Feb-17 IT Services Root6 Provides storage, server and specialist technology solutions and managed services for media and higher education clients such as ITN, BBC and Honda R&D. Jigsaw24 (NorthEdge) Undisclosed 16-Feb-17 Media & Advertising HYPE 36 HYPE 36 is a creative digital agency specialising in building websites, mobile marketing campaigns, and video services. Single Malt Undisclosed 10-Feb-17 Media & Advertising NSM Music Group NSM is a leading digital jukebox manufacturer and operates a digital music network serving bars, pubs and restaurants in locations in North America, the United Kingdom and Europe. AMI Entertainment Network Undisclosed 9-Feb-17 Data Analytics Derwentside Environmental Testing Services Derwentside Environmental Testing Services provides analytical services for environmental, construction, waste, fuel, and engineering industries in the United Kingdom. MBO Undisclosed 9-Feb-17 Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 8 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Northern Tech Investment Q1 2017 M&A transactions Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. Category Company Description Buyer(s) EV (£'000) Date Mobile Applications Playdemic Playdemic produces the Lego mobile games along with others such as Gourmet Ranch, Village Life, Gang Nations, and Golf Clash. The company's entire portfolio has been downloaded 50 million times. TT Games (subsidiary of Time Warner) Undisclosed 8-Feb-17 Media & Advertising Space Creative Space Creative is a digital design agency based in York. Wrapped Agency Undisclosed 6-Feb-17 Cyber Security Secure Information Assurance Secure IA designs, develops, builds, and supports information security, and hosting and collaboration solutions. Its infrastructure as a service provides clients with a secure platform upon which to host virtual machines of various sizes and service levels. UKFast.net Undisclosed 5-Feb-17 Med-tech Steeper Group Steeper is a specialist designer and producer of artificial limbs for the NHS. It was originally set up to provide prosthetic limbs to veterans of the First World War, and since then has expanded across prosthetics, orthotics and assistive technology. MBO Sale of Bebionic Division to Ottobock Undisclosed 3-Feb-17 Enterprise Software IQUS IQUS, trading as RotaMaster, provides roster and workforce management solutions software for the healthcare industry. M3, Inc. 7,280 3-Feb-17 IT Services Coal Face Development Coal Face Development designs, develops and provides ongoing support services for websites. They also provide digital marketing services including search engine optimisation. Drummond Central Undisclosed 31-Jan-17 E-commerce, Automotive Zenith Zenith has more than 500 employees and provides end-to-end automotive services focused on contract hire, salary sacrifice, fleet management and short-term hire services using their proprietary technology. MBO with Bridgepoint 750,000 30-Jan-17 IT Services Landesk (now Ivanti) Landesk offers user-centered IT solutions designed to increase user productivity while reducing IT security risk. Clear Capital Partners Undisclosed 30-Jan-17 Enterprise Software Liquid Voice Liquid Voice develops enterprise call recording and contact centre software. SVL Business Solutions 25% stake, undisclosed 24-Jan-17 Media & Advertising True North True North is a TV production company which made over 150 hours of factual content in 2016. Shows such as A New Life in the Sun, Building the Dream, and some single Dispatches and Panorama documentaries. Sky Undisclosed 23-Jan-17 Media & Advertising Cuffe & Taylor Cuffe & Taylor produces live events, as well as providing event management services for existing promoters in the United Kingdom. Live Nation Entertainment, Inc. Undisclosed 23-Jan-17 Cyber Security icomply icomply develops security software with features such as CCTV video management, record & playback, key control, lone worker and dispatch management. Veracity Undisclosed 19-Jan-17 Media & Advertising Excel Media Solutions Excel Media Solutions provides contract publishing, online, digital, and events services. Buxton Press Undisclosed 18-Jan-17 Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 9 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Northern Tech Investment Q1 2017 M&A transactions Category Company Description Buyer(s) EV (£'000) Date Hardware Cable Power Cable Power distributes power products and accessories to single board computing providers such as Rapid Electronics, Farnell, CPC and Raspberry Pi. Stadium Group 750 12-Jan-17 Hardware Thyson Technology Thyson is a specialist analytical and instrumentation business, which designs and constructs engineering solutions used in the analysis and sampling of gases and liquids for process industries such as the pharmaceutical, steel and utilities sectors. MBO with NVM Private Equity Undisclosed 4-Jan-17 Hardware CMD CMD designs, develops and manufactures products which help meet the challenges of integrating power and media access for people working in offices. Ideal Industries Undisclosed 4-Jan-17 Sources: Beauhurst, S&P Capital IQ, KPMG proprietary research. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member 10 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Questions? Please contact our TMT team Graham Pearce Head of KPMG Corporate Finance Technology, Media and Telecommunications in the North Graham Pearce leads KPMG's technology, media and telecommunications sector business in the North. He specialises in advising on M&A transactions and also is supported by a multi disciplinary team of industry specialists across tax, advisory and a within KPMG. Contact details: Phone: +44 (0) 113 231 3855 Email: graham.pearce@kpmg.co.uk kpmg.com/uk udit The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2017 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Designed by CREATE | CRT074287A </p>
