UK companies set for record year of venture capital investment

VC funding for UK technology companies hits $4.9bn in H1, twice the amount of capital secured by this time last year

The UK is set for a record year of venture capital investment, accounting for nearly two thirds of European deal values in the first half of 2019.

The total amount of funding secured by UK technology companies alone has already hit $4.9bn, which compares with the record $5.8bn invested by global VCs in UK businesses in total in 2017.

The $4.9bn invested in UK tech is twice the amount of capital secured during first six months of 2018, according to research by early stage VC fund White Star Capital.

Much of this year’s venture capital investment so far has been driven by the rise of mega rounds of over $100m, with the UK representing more than a third of all of Europe’s mega rounds. However, 81pc of all mega rounds in the UK have been led by international investors, perhaps demonstrating a missed opportunity for domestic UK venture capitalists.

Fintech continues to spearhead VC investment, attracting 22pc of all UK VC deals in the first six months.

Artificial intelligence recorded 15pc of deals this year, with digital health and e-commerce sectors both posting 4pc.

Venture capital investment

Eric Martineau-Fortin, managing partner of White Star Capital, said: “In recent years, the UK has subsequently strengthened its position as a global leader in attracting VC investment and this report delivers a vote of confidence in the UK’s fast-growing businesses and the wider ecosystem during a crucial period for the nation.”

White Star says the attractiveness of the UK for venture capital searching for those elusive unicorns — companies which go on to have a valuation of $1bn or more — is partly becasue of the strength of its universities. UK founders from the top 10 universities have raised over £23bn between them, with Cambridge and Oxford the leading producers of entrepreneurs in the UK. Home to four of the world’s top 10 universities, the UK has never struggled for talent, says White Star. Fifty per cent of UK unicorn founders attended UK universities.

And the UK’s strength as a source of crowdfunding is also an influence: Seedrs and Crowdcube have been the conduit for over $1bn of seed-stage investments in UK technology firms. Britain has three times the volume of crowdfunding compared to its nearest rival, Spain. Over 50pc of seed funding has been crowdfunded since 2016.

However, White Star points out that there are no UK universities in the top 50 schools for entrepreneurship, which shows a significant issue with regards to future talent, Brexit or no Brexit.

Nicholas Stocks, general partner at White Star Capital, said: “Our report addresses how the UK is likely to be affected by leaving the EU, as we consider how the nation can continue to attract major international companies and boost later-stage funding for the most innovative, homegrown firms. The key word is ‘talent’ – as nurturing and investing in tomorrow’s entrepreneurs will help to ensure that the UK can consolidate its position on the global stage.”

Further reading

This year set to be record one for funding UK start-ups and scale-ups

Related Topics

Female founders