US and Asian investment in UK tech skyrockets

The UK tech sector has attracted more foreign investment in the first seven months of 2019 than it did during the whole of last year and has overtaken the US for foreign investment, per capita.

Research prepared for the Digital Economy Council by Tech Nation and Dealroom.co shows that between January and July this year, UK-based tech firms received a staggering $6.7 billion in funding – with $3.7 billion, or 55%, coming from American and Asian investors thanks to billion dollar tech companies such as energy supplier OVO Energy and food delivery startup Deliveroo.

The sector is attracting an average of $1bn a month from both foreign and domestic investors – one and a half times the amount raised during the same period last year – making the UK one of the most attractive and dynamic markets in Europe.

Overseas Investment

These record-breaking figures have undoubtedly been boosted by an extremely keen interest in UK tech by investors in the US and Asia.

Twice the value of US and Asian investments have been made into the UK tech scene since 2013 compared to those made in Germany, and six times as many as those in France. The total amount of investment in the UK from these sources has surpassed $3.7bn in the first seven months of 2019.

With the exception of Germany, this surge in foreign investments from US and Asian investors is higher than the amount received by the whole of the rest of Europe. Since 2013, this takes the total amount of money put into the sector by US and Asian investors to $14.6 billion compared to a respective $6.5bn and $2.5bn into Germany and France.

The biggest drivers of this investment include fintech Checkout.com, which received $230m from Insight Partners; supply chain finance firm Greensill, having received $800m from Japan’s Softbank; London-born Deliveroo which recently achieved $575m Series G funding from the likes of Amazon and Fidelity; and Bristol-based OVO Energy, the recipient of $220m via Tokyo’s Mitsubishi Corporation.

High-Value Deals

The surge is in part due to the rising number of high-value deals. During the second quarter of 2019 more than $1.9 billion came via deals involving investments of $100 million or more.

Across the country, the number of global investors increases the higher the round size, with the data showing that the percentage of deals involving at least one foreign investor peaks when the value of an investment totals $50 million or more.

An incredible 92% of deals of this round size in London involved a foreign investor. But this is not exclusive to the capital, in fact, quite the opposite. High-value deals made outside of London, such as Bristol’s OVO Energy, also had high levels of foreign investment.

Paying it forward

Beyond the amount of cash flow such investments can put into the wider economy, the rising interest in UK tech is having a significant impact on the creation of jobs, particularly high-paying jobs, in the sector.

In 2016, a total of 10,100 people were employed by these leading UK tech firms. By 2018, this had risen to 13,600 and in 2019 to date, this figure sits at 14,900 and rising.

When looking at the sector as a whole, recent research from Tech Nation found that in at least five UK cities, one in ten of the workforce is now involved in digital tech and a total of 2.1 million people work in the industry across the UK.

Digital tech roles offer salaries on average 10% higher than in other industries, and it’s not just tech jobs that are opening. A total of 230,000 non-tech jobs, including roles in HR, marketing, communications and more, were advertised in the tech sector in 2018.

Eileen Burbidge, Chair of Tech Nation said: “Investment in the UK tech sector has been steadily rising for years and as these latest figures demonstrate, the momentum is increasing. It is incredibly gratifying to see that in addition to domestic and European investors, British tech innovators are also attracting US and Asian investor attention and allocation.

“The fact that this is growing is a testament to the strength and depth or our entrepreneurial talent, coupled with the dynamic and deeply engaged ecosystem that has been established here in the UK.”

Commenting on the increase in US investment Suzanne Ashman, partner at LocalGlobe  said: “These latest figures cement the UK tech sector as a global leader when it comes to digital innovation. The influx of US and Asian investment not only proves just how valuable our expertise is to foreign markets, it will help attract the next generation of tech talent to go onto even bigger and better things.”

Commenting on the increase in US investment Guillaume Pousaz, the founder of Checkout.com, said: “From its high-quality engineering talent to its cultural diversity and unparalleled energy around the startup scene, the UK tech sector presents unique qualities and it’s no wonder US investors are flooding into it.

“With tier one investment firms managing to attract and retain the very best talent, US investment will only strengthen the UK’s leading position in the coming years.”