The UK’s tech sector is on course for a record year of investment after a flurry of mega deals sent venture capital investment soaring to £13.5 billion in the first six months of the year.
The H1 total tops the figure achieved in the whole of 2020 and is almost triple what was achieved halfway through 2020.
The new figures, compiled for the UK’s Digital Economy Council and Tech Nation by Dealroom for London Tech Week, demonstrate how the UK continues to extend its lead over rival European startup hubs and has attracted more venture capital investment than France, Germany and Israel combined during 2021.
A handful of mega fundraising rounds by leading UK tech companies have helped push the total VC raised into record territory. More than half of all rounds raised this year have been for $100m+.
Notable mega-rounds – those over £72m – included neobank Revolut, which raised £577m at Series E; Cinch, the car sales platform, which raised £1bn; cybersecurity platform Snyk, which raised £289m at Series E; and Hopin, the online events company, which raised £289m at Series C to cement its status as the fastest-growing European tech company ever.
International outlook
As the UK gets ready to welcome the world’s investors for London Tech Week, the figures will underline the UK’s position as the leading centre of tech in Europe and the main challenger to Silicon Valley after China.
Over 1,400 UK tech companies have benefited from the £13.5bn raised and the investment is more than double that achieved in the next biggest market – Germany (£6.2bn).
This influx in cash to UK startups has helped secure $1bn + valuations for even more of the fastest-growing tech companies. The UK is now home to 105 unicorns – private companies worth $1 billion or more – with 20 created in the past six months alone including Tractable, Zego and Depop. In comparison, it took 24 years (from 1990 to 2014) to create the UK’s first 20 unicorns.
The number of futurecorns – high-growth companies with the potential to become unicorns – is also growing, with 153 possible candidates in the UK. Some of the top futurecorns in the UK are the digital bank Zopa, global kids entertainment company Moonbug, and direct-to-consumer letterbox flowers platform Bloom & Wild.
As revealed by Tech Nation in June, the UK is also home to 12 $10bn tech companies – of which seven were created during 2021.
By sector
FinTech continues to dominate the majority of investment rounds with the sector attracting £4.2bn in the first six months of the year. FinTechs also account for 11 of the 20 companies that became unicorns in the first six months of 2021.
FinTechs dominate the top 10 most valued tech companies in the UK, including Revolut, valued at £23bn; Checkout.com, the enterprise payment service; Wise, the international money transfer platform which recently went public; and eToro, the cryptocurrency trading platform.
After FinTech, the sector that has attracted the most funding so far this year is HealthTech, with £2.7bn raised, then enterprise software, at £1.3bn. Both sectors have benefited from a surge in investor and user interest arising from the pandemic.
Julia Hawkins, general partner at LocalGlobe, said: “The UK’s strengths in BioTech and HealthTech are starting to be recognised and investment is flowing into this sector where we already have world-leading intellectual property. The challenge now is to bring these companies to scale.”
TransportTech – a sector that has seen a challenging 18 months – has also been successful in attracting funds, raising £1.1bn in total so far.
Three other sectors have also seen a significant uplift in year-on-year investment: these are robotics – 12.8 x higher than last year; event tech which has raised 7.2 x higher than in 2020 and jobs recruitment, which has raised 5.9 x more than at the same point in 2020.
By region
After London, the city which has attracted the most in VC funding so far this year is Oxford, followed by Bristol, Birmingham and Cambridge.
Startups in Scotland have raised £53.5m so far this year, including a £35.9m round by alternative protein company Enough and a seed round by the on-demand workspace platform Desana.io.
Over in Northern Ireland, tech companies have raised £18.8m already in 2021.
Rana Yared, general partner at Balderton Capital, said: “The UK is home to one of the most diverse and vibrant tech industries in the world.
“Entrepreneurs launching new companies today have some great models to learn from, including companies like The Hut Group, Zego, and Depop. Uniquely to the UK, multiple tech hubs have thrived outside of London, such as Cambridge. Manchester, and Oxford, demonstrating the transformative power of technology.”
Meanwhile, the capital continued on its strong growth trajectory and is now home to 71 unicorns, created since 1990. Cinch raised the biggest round, of £1bn, followed by Revolut’s £578m Series E, which made it the nation’s most valuable tech company at £23bn.
The combined value of UK tech companies founded since 2000 is now £428bn and climbing. 2021 has also been a year in which large numbers of home-grown tech companies have listed on the London markets, including Deliveroo, Darktrace and Wise, London’s largest-ever tech listing.
“The success of established companies like Wise, Darktrace and Depop show there is a clear pathway for UK tech companies to make an impact on a global scale, and at Tech Nation we will continue to support entrepreneurs and startup founders as they grow their businesses from first investment cheque all the way to IPO,” said Gerard Grech, founding CEO of Tech Nation.