UK ‘unicorn’ creation plummets as tech venture capital dries up
The creation of so-called tech unicorns in the UK slowed by more than ten times last year as venture capital dried up and companies reined in their valuations to raise cash, new data has revealed.
The growth rate of unicorns – firms worth more than $1bn – slowed to four per cent in 2022 , plummeting from a 41 per cent growth rate the previous year, according to a report from start-up quango Tech Nation.
The slowdown in funding came amid a drought in venture capital cash as rising interest rates push up the cost of money and investors sour on loss-making start-ups.
Tech Nation found that the UK hit a five-year low in terms of the number of funding rounds as the headline figure plunged over 1,200 from the frothy peaks reached in 2021.
Chiefs at Tech Nation, which is due to be wound down this month after the government pulled its funding, said the figures underscored the need for a coherent growth plan for the sector.
“The last decade of UK tech has been an incredible success story. One in which the UK is now third in the world for tech investment, after the US and China. But there is much more we can do and value to be unlocked if we create the right conditions for future growth over the coming years, as this report shows,” said Tech Nation chief Gerard Grech.
Grech urged ministers and the industry to focus on “opening up new pathways for talent to increasing sources of funding”.
The comments come as the future of a feted visa programme for overseas workers, run by Tech Nation, is thrown into doubt after ministers gave its grant to Barclays Eagle Labs.
Grech added that he was “optimistic about the next decade and the UK’s ambition to become a science and technology powerhouse.”
Tech Nation predicted that the UK’s tech sector will be worth $2.6trillion by 2032, up from $1trillion in 2022.