More than 950 UK tech companies have raised a combined £12.4bn in the first five months of 2022 against a backdrop of slowing growth in global public markets.
In the first three months of the year, UK tech firms raised a record £9bn, up from the £6.3bn raised in the first quarter of 2021. During that period the UK overtook India and China for tech investment, behind only the US globally.
The data was gathered by Dealroom and analysed for the UK’s Digital Economy Council ahead of London Tech Week.
Despite a record first quarter, there are signs that the UK’s private investment markets are beginning to slow.
Investors globally are taking a more cautious approach than last year amid rising interest rates and economic uncertainty caused by Russia’s invasion of Ukraine.
Startups that have previously raised money at eye-watering valuations are now raising at lower valuations – or struggling to raise capital at all.
While there has been a modest slowdown in UK investment over the last two months, the overall total so far this year has already surpassed the £12bn raised in the whole of 2020.
Similarly, US investors have already poured more capital (£6.1bn) into UK tech companies than they did for the whole of 2021 (£6bn).
“Despite the wider global challenges that have led to a slowdown in public markets, private tech investment in the UK is continuing to grow,” said Yoram Wijngaarde, founder and CEO at Dealroom.
“The UK has cemented its reputation as one of the best places to invest in fintech, with more fintech investment going into the country in the first part of this year compared to even the Bay Area.
“Nearly everything will be affected by the downturn we’ve entered into, but overall the UK tech sector is in a strong position than it’s ever been before in terms of breadth and depth of the entire ecosystem.”
UK home to 122 unicorns
London has cemented its position as Europe’s leading tech hub once again, with tech firms based in the capital raising £8.6bn so far this year – double the £3.9bn raised by Paris-based firms and more than four times more than those located in Berlin.
According to the report, the UK is now home to 122 unicorns – startups with a private valuation of $1bn or more.
There are also 248 companies identified as futurecorns, companies on course to reach unicorn status.
Growth has continued outside of London with Cambridge, Oxford and Abingdon among the top 20 European futurecorn hubs. Companies include Healx, Oxbotica and Immunocore.
Taavet Hinrikus, co-founder of British fintech company Wise, said: “I’ve been investing in startups across Europe for nearly 15 years and the past 12 months have been unlike any I’ve experienced. I believe we’re at the start of a new frontier for technology and I hope to find and support the next 100 iconic companies that will be started in the UK and grow into global giants.”
Fintech continues to be the UK’s most dominant tech sector, with startups bringing in half – £6.2bn – of the country’s VC funding this year.
In January, Checkout.com was crowned the UK’s most valuable private fintech company after it raised £730m. And last month, payments provider Paddle hit unicorn status following its £162m Series D round.
Harry Briggs, managing partner at OMERS Ventures, said: “Transformative ideas come out of challenging situations – we saw this post-2008 and we’ve been seeing this during and after the Covid-19 pandemic.
“This new generation of startups is taking on challenges such as tackling the climate crisis to creating revolutionary digital health diagnostic tools and I’m optimistic that the next generation of tech startups will be even bigger and more transformative than the last.”