The UK Outpaced US and China in Venture Capital Growth in 2019
It’s official: Venture Capital investment in UK tech startups surged by 44% in 2019. This means the country’s boom in the technology sector investment keeps to outpace that of the US, China, Germany, and France.
New data from the government’s Digital Economy Council suggests that around £10.1bn ($13.2bn) was pumped into companies within the tech sector, which meant the UK singlehandedly secured 33% of all European tech investment last year.
The findings, reported by Tech Nation and Dealroom.Co, also suggest that the United Kingdom produced twice as many unicorns — companies with valuations in excess of £1bn — than Germany, and 3 times as many as France. London now stands shoulder-to-shoulder with San Francisco, Beijing and New York as one the top cities in the world for venture capital investment.
2019 became the third year in a row where growth in Venture Capital investment exceeded 40%.
The top performing tech startup sectors of 2019 were fintech, artificial intelligence and clean energy. Fintech continues to be the UK’s standout star, more than doubling its 2018 total to reach $5.4bn last year — three times more than in Germany, and 7.5 times more than in France.
The facts, the council stated, also indicates the United Kingdom is now behind just the US and China in terms of global VC funding. Miles ahead of other countries of similar or even larger GDP.
The largest round in UK history occurred last year, when fintech lender Greensill raised $800m from Softbank. Deliveroo, Oaknorth, and CMR Surgical also raised mega-rounds.
London is likewise the main city for unicorns inside the UK, and has produced 46 over the past three decades. Companies there raised collectively £7.4bn.
In the same period, Manchester, Oxford, Cambridge, Edinburgh, and Bristol produced a combined general of 20 unicorns.
Mayor of London Sadiq Khan said that London’s tech sector became “a global success story.”
Separate data from KPMG and Pitchbook, however, confirmed what internal community data indicated at Silicon Roundabout: the spread of investment into the UK’s early stage tech startups continued to slow last year, while scaleups surged ahead to generate the overall increase.
This last fact is in contrast with the continue increase in new innovation-driven startup companies being formed in 2019.
May we suggest this signals a need for a new and bolder approach to Early Stage VC investing?
It’s positive that the now established ex-bankers-led VCs ensure a steady flow of money at Growth Stage, but what about the 1000s of promising tech disruptors needing Seed and Early Growth funds?
Here at Silicon Roundabout we focus on Deep Tech early stage startups and 2019 was the year we accepted and reviewed the most entrants in sectors like IoT, Applied AI and Cybersecurity since our beginnings in 2011. This was not met, however by a parallel increase in early stage funding growth. Data now confirmed growth across the UK did happen but at a much slower pace.
Ultimately, the overall growth signals a more mature and aggressive market, which can only be great news.
Whether the growth can be sustained in this new decade, with the 4th industrial revolution in full swing already, will depend on the capacity of Angels and VC backing Investors to realise Early Stage funding needs to keep growing too.