The heads of two companies that aggregate venture capital deals are engaged in a public war of words over how much investment UK tech companies received over the last two years.
Last week Business Insider reported that London & Partners, Boris Johnson’s promotional agency, has been accused of exaggerating the amount of money being invested into tech startups across London and the UK when it cited data from New York-headquartered VC aggregator CB Insights.
London & Partners said there had been an increase of over 70% in the amount of money invested into UK tech companies between 2014 and 2015. But venture capital analysts at Dealroom said this is “hard to believe.”
According to London & Partners, investment in UK tech firms grew by $1.5 billion (£1 billion), from $2.1 billion (£1.4 billion) in 2014 to $3.6 billion (£2.5 billion) in 2015.
“This [the data] didn’t sound right to us and our data indicates a slight decline from $5.6 (£3.8) to $4.9 (£3.4) billion, or given a margin of error, a roughly equal amount of funding in both years,” wrote Dealroom’s CEO and former Lehman Brother’s associate, Yoram Wijngaarde, in a blog post on the company website. Dealroom’s data suggests there was a 10% decline in UK venture capital investments from 2014 to 2015.
CB Insights vs. Dealroom
CB Insights CEO and founder Anand Sanwal is unhappy about Dealroom’s accusations and has pointed out what he believes to be a number of flaws in Dealroom’s own data.
Sanwal, a Harvard Business School graduate and former VP at American Express in New York, told Business Insider via email:
I hadn’t heard of Dealroom but dug into their data after seeing your story.
The short of it is that Dealroom data is fundamentally flawed.
This is not something that can be explained away as the result of definitions or classifications as they try to preemptively say in their post.
It is just wrong.
Just a few examples of many. Some are big misses and others are just deals that have no relevance to tech funding.
- They missed O3B (which raised $510M in 2015)
- They included Adaptimmune ($104M) which develops therapies to treat cancer
- They included Cell Medica ($72.5M) which manufactures cellular immunotherapies
In just a quick 20 minute scan, and we identified 30+ other deals that do not belong (non tech, bad data, etc). This, of course, doesn’t even count the deals they missed.
I applaud Dealroom for the PR win here but unfortunately, the data lacks credibility.
Wijngaarde responded to Sanwal with a follow-up blog post in which he defended his initial claims and explained why Dealroom includes certain deals in its own data.
Defending the deals that Sanwal pulled out, Wijngaarde wrote: “Some examples are interesting, some are questionable, and some are wrong. None of them will provide a foundation for the claimed 70% growth figure nor bring us much closer to most of the numbers they provided.”
“It’s a shame that CB Insights went directly into defence mode,” said Wijngaarde in the post. “If the 70% growth claim can be backed up by data, why not just show it? If the 2014 funding figure is missing some deals, publish a correction and let’s move on. Mistakes and omissions are OK, if corrected when found.”
He continued: “CB Insights founder Anand Sanwal instead went to Twitter complaining about Dealroom’s “attacks” (quote) and sharing this short post, dismissing Dealroom data as “fundamentally flawed”, “not credible”, and “garbage”, while providing some specific examples from the data we published.”
Following the publication of last week’s article, London & Partners said, “The data published by London & Partners about venture capital investment into London and the UK’s technology sector, covering the last five years, has been sourced from CB Insights, a widely used and trusted source, using a robust and consistent methodology.”
“The most recent data, which covers the fourth quarter of 2015, contained information about one deal in error. London & Partners swiftly pointed this out to CB Insights which has since removed the information and amended the figures accordingly.”
Business Insider has contacted London & Partners to see if it wanted to provide an updated comment but the organisation did not immediately respond.