Early-stage venture capital fund White Star Capital has released a new report on the UK venture capital landscape from the eyes of an international investor.
The report reveals that, despite strong headwinds, the UK is set for a record year of VC activity. Following a decline to $5.4bn in 2018 from the record heights of $5.8bn experienced in 2017, this year is set to surpass the previous figures.
The total amount of funding secured by UK technology companies has already hit $4.9bn, accounting for 85% of 2017’s funding and twice the amount of capital secured during the first six months of 2018.
The UK continues to outpace the rest of Europe, with UK venture capital totalling 63% of European-wide deal values during the first six months. Much of this is driven by the rise in mega rounds of over $100m , with the UK consistently representing more than a third of all of Europe’s mega rounds. However, 81% of all mega rounds in the UK have been led by international investors, perhaps demonstrating a missed opportunity for UK venture capitalists.
The fintech sector continues to lead the way, attracting 22% of all UK VC deals to date in 2019. Artificial intelligence, meanwhile, has recorded 15% of the deals this year, with the digital health and e-commerce sectors both posting 4%.
White Star Capital has identified several key factors for the continued commitment of capital to the UK ecosystem. The first is the wealth of available talent, with 50% of the founders of the 17 unicorns in the UK having attended UK universities. In addition to this, 63% of Series C+ founders worked with UK-based companies prior to launching their start-ups.
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It is also worth noting that the UK’s focus on technology has played a major role in the growth in popularity of crowdfunding. From January 2016 to June 2019, over 50% of seed deals were crowdfunded. The two platforms Seedrs and Crowdcube have been a financing conduit for over $1bn of early stage seed stage investments in UK startups, contributing to almost three times as many deals in the UK (155) in 2018 than there were in Spain (47).
Eric Martineau-Fortin, Managing Partner of White Star Capital, commented: “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.”
Nicholas Stocks, General Partner at White Star Capital, added: “The UK’s reputation as a global hub for financial services continues to grow and it is maintaining its influence in a number of other large markets, particularly the US. The nation’s future success will rely on regulation that encourages business growth, greater investment in education and research, along with further support for the tech sector.