Belfast, Glasgow and Birmingham lead VC investment growth

VC investment UK Image credit: James Kennedy NI / Shutterstock

Belfast, Glasgow and Birmingham are the fastest-growing UK startup ecosystems for venture capital investment, according to new data.

VC investment into Belfast has grown by 221% since 2019, reaching $80m (£65.3m), making it the fastest-growing city in the UK for startup investment, according to data from HSBC Innovation Banking and Dealroom.

Over the same time period, Glasgow grew its VC investment by 211% to $109m and Birmingham has grown its investments received by 195% to $94m in 2023.

London, which received the highest amount of VC investment in 2023 at $6bn, has fallen 48% from 2019.

Other standout performers in the report include Sheffield, which boosted the amount of VC investment it received by 145% to $88m and Oxford, which grew by 103% to $599m.

Newcastle, Manchester, Bristol and Liverpool’s VC investment, however, all fell by more than 60% from 2019.

The report found that total VC investment in the UK for the year is currently at $15bn and was on track to hit $18bn by the end of the year, putting it on par with the UK’s performance in 2020, though far below 2021’s $42bn and 2022’s $32bn.

The UK as a whole has held third place globally for VC investment, behind China and the US. The UK, therefore, remains the most invested in startup ecosystem in Europe, ahead of France at $8bn and Germany at $7bn.

Despite leading Europe, the UK’s total VC investment dropped 14% from 2019, while France has increased its share of investment by 27%.

HSBC Innovation Banking’s report also noted that 37% of the UK’s VC investment received came from the US, while only 31% was from domestic sources.

The data comes as the government explores options for boosting British investment, including tapping into pension fund resources.

In July, nine major pension providers in the UK agreed to assign 5% of their default funds into unlisted equities, amounting to £75bn of extra capital to go towards startups. This week, 20 VCs signed a compact to “voluntarily commit” to bringing on pension funds to invest in their funds as limited partners.