Startups

UK tech investment hits £12.4bn as private firms buck volatility


The amount of cash pumped into British tech firms surged beyond that of China in the first five months of the year as private British tech firms bucked the volatility that has rocked publicly listed tech stocks.

A record £9bn was raised by private UK firms in the first three months of the year, pushing total UK funding to May to £12.4bn and placing the UK second behind the US globally in terms of capital raised, according to data by Dealroom analysed for the UK’s Digital Economy Council. 

London also retained its crown as the tech investment capital of Europe, with firms attracting £8.6bn – double Paris (£3.9bn) and over four times the amount of Berlin (£1.9bn).

Dealroom founder Yoram Wijngaarde said that despite the wider global challenges that have led to a slow down 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.”

UK funding levels in the first five months mean that capital raised in the UK has topped that of China in the first five months of 2022, which Digital secretary Nadine Dorries described today as a “staggering achievement”.

However, it comes after the value of venture deals in China slumped 44 per cent in the first four months of the years, according to data firm Preqin, after policy makers in Beijing clamped down on tech firms and committed to a hardline zero-covid policy which has deterred investors.

Fears have also grown of a major slowdown in global venture capital investment globally in the second half of the year as as soaring inflation and interest rate hikes make cash harder to come by for investors and threaten to put an end to the booming venture investment levels seen in the past decade.

Valuations of tech firms have also begun to slump as inflation and interest rate hikes threaten to stymie growth, which analysts predict will begin to hit in full force in the second half of this year.

Nalin Patel, senior analyst of EMEA private capital at Pitchbook said: “2022 has been characterised by uncertainty stemming from macroeconomic volatility, and we believe VC stakeholders feel growth may be harder to come by.

“Interest rates have risen in major economies, which could signal the end of the cheap capital that has underpinned the private market boom during the past decade.”



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