UK tech startups and scaleups have secured £12.4bn in venture capital (VC) funding in 2022 so far, with a record-breaking £9bn being raised in the first quarter of the year alone, according to industry figures from Dealroom.
For comparison, UK tech startups raised around £6.3bn in the first quarter of 2021, and £12bn in the whole of 2020. This places the UK second only to the US in terms of tech startup investment.
The data, published to coincide with London Tech Week starting 13 June 2022, shows the capital was raised by just over 950 startups.
The influx of capital means the UK is now home to 122 unicorns, with more than 20 cities and towns home to at least one, and 248 potential “future unicorns”.
However, of the total £12.4bn raised, £8.6bn of this amount went to London-based startups. For comparison, the next two UK largest tech investment hubs were Bristol and Oxford, which raised £220m and £248m respectively.
“It is a staggering achievement that UK tech companies are attracting more investment than countries more than10 times our size. This is a huge vote of confidence in the talent behind great British tech and the innovative, competitive market that we have here,” said digital secretary Nadine Dorries, who added the UK government would be unveiling a new strategy “to capitalise on this success by helping firms grow, create and fill new high-skilled jobs and deliver revolutionary technologies to improve lives across the UK”.
Founder and CEO at Dealroom, Yoram Wijngaarde, noted that despite a wider global slowdown in public markets, private tech investment in the UK is continuing to grow.
“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,” he said.
“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.”
In terms of which sectors received the most VC funding, £6.2bn of the total amount went to financial technology (fintech) firms, including nearly £800m to Checkout.com in a Series D funding round, and £162.2m to payments provider Paddle, which pushed the firm to unicorn status.
The next most invested in sectors were healthtech and impact startups – those addressing one or more of the United Nations’ Sustainable Development Goals – which both received around £791m. Impact startups had a record investment in year in 2021 after raising a total of £2.7bn.
“Data like this is important to showcase where we are but it also helps motivate us to do better – we want to see more diverse founders and more impact companies launching to take on the difficult global situations we’re facing,” said Russ Shaw, founder of Tech London Advocates and Global Tech Advocates.
In March 2022, separate figures from Dealroom found that he onset of the Covid-19 pandemic prompted massive investment in the UK’s digital companies, which are now collectively valued at $1tn.
In September 2021, the UK government also took stakes in 158 high-growth startups after its Covid support loans converted into equity. Launched in April 2021 by finance minister Rishi Sunak to support startups and loss-making companies with the investment needed to stay afloat during the pandemic, the Future Fund scheme’s investment came in the form of convertible loan notes, giving the UK government equity shares in the enterprise when the funding is converted.
Tech-related companies on the list included Vaccitech PLC, which co-invented the Covid-19 vaccine with the University of Oxford; Century Tech, an education platform that uses artificial intelligence (AI) to personalise learning for children; gig ticketing app Dice FM; and Ripple Energy, which allows customers to buy shares in wind farms.
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