Investment into the UK’s burgeoning scene of tech startups grew more than anywhere else in the world last year, leaving previous records in the dust as investors sought private markets.
Venture capital funding for UK tech firms reached £10.1bn in 2019, rising 44 per cent year on year and breaking the all-time high set two years earlier.
It surpassed growth in all other countries, including in the US and China, where investment fell 20 per cent and 65 per cent respectively.
Data from Tech Nation and Dealroom today revealed the UK garnered a third of Europe’s £30.4bn total. It received more funding than Germany and France combined, which came in second and third place at £5.4bn and £3.4bn.
London now stands shoulder-to-shoulder with San Francisco, Beijing and New York as one the top cities in the world for venture capital investment. It also far surpasses the rest of Europe in terms of the number of accelerator programmes for startups, and the number of so-called unicorns — companies valued at more than $1bn (£767.6m) — headquartered in the city.
The top performing tech startup sectors of 2019 were fintech, artificial intelligence and clean energy. Fintech continues to be the UK’s standout star, more than doubling its 2018 total to reach $5.4bn last year — three times more than in Germany, and 7.5 times more than in France.
“These numbers clearly show that if you want to invest in a high potential technology business, then you need look no further than the UK,” said Cindy Rose, the British chief executive of Microsoft.
Eight unicorns were created in London last year, taking the capital’s total to 77. These included fintech favourites Sumup and Checkout.com, as well as Ovo Energy, Babylon Health and Trainline.
The largest round in UK history occurred last year, when fintech lender Greensill raised $800m from Softbank. Deliveroo, Oaknorth, and CMR Surgical also raised mega-rounds.
“Last year was a very good year for tech,” Frederic Court told City A.M., founder of Peloton and Goop investor Felix Capital.
“It will continue to do very well in terms of usage and opportunity. But the harder thing with tech, and especially for those at later stages, is getting the valuation right. Many of these companies will succeed, but the tricky question for investors is what they will be worth eventually.”
Separate data from KPMG and Pitchbook today showed the spread of investment into the UK’s early stage tech startups continued to slow last year, while scaleups surged ahead.
“Access to funding is a foundation for growth, and domestic innovation could be impacted if our next wave of entrepreneurs fail to attract the capital they need to grow now,” said Tim Kay, a director at KPMG’s private enterprise arm. “At best, it will slow their growth; at worst, it will make them uncompetitive on a global stage, leading them to relocate or become unsustainable.”