The amount of money ploughed into British start-ups fell by 19 per cent in 2018, but fintech and blockchain investment bucked the trend.
Funding into the UK’s tyro companies dropped from 2017’s record high of £8.6 billion to £7 billion last year, according to research house Beauhurst.
The volume of deals also dropped by 10 per cent last year to 1,572 from 1,755 in 2017.
The average investment was £5.4 million.
Deals at seed stage fell 15 per cent to almost the same level as 2014, despite equity crowdfunding — the most popular source of seed funding — reaching a record number of deals.
Henry Whorwood, head of research and consultancy at Beauhurst, warned that although the overall decline in investment could be seen as the market correcting itself after some “megadeals” in 2017, the 15 per cent decline in deal numbers for seed-stage companies was worrying.
“The seed-stage can often be thought of as the canary in the coalmine – if seed-stage activity drops off, the pipeline of investable companies at later stages also diminishes in time,” said Whorwood.
Blockchain and fintech both recorded all-time highs for the number of rounds achieved in 2018, with blockchain reporting a 75 per cent rise in deals from 2017, while advertising tech deals almost halved.
Fintech carved out £1.23 billion in funding last year and became the dominant investment vertical, followed by life sciences.
Some British regions did see growth in investment, particularly the North West and Wales.
Just 16 per cent of 2018’s deals went to female-founded companies, compared with 18 per cent two years earlier. A total of £570 million was invested in female-founded businesses last year.
Whorwood said: “It was always going to be difficult for 2018 to match the unprecedented levels of 2017 – but it did come close. As we enter a period of unprecedented political uncertainty, it is tempting to interpret these numbers as the beginning of a more pronounced decline. When looking into the data underlying these figures, the prognosis is much more nuanced.”