Venture capital funding for UK tech startups drops 28% in 2018
UK undertaking capital funding for tech startups has dropped 28% since 2017, however continues to outpace every other European nation.
British corporations raised £2.49bn in 2018 consistent with finish of 12 months funding knowledge from London & Partners and PitchBook, beating their German opposite numbers by means of over £1bn. London’s tech firms attracted 72% of the UK overall.
“London and the UK are growing world-class firms of scale, particularly in high-growth spaces equivalent to fintech and synthetic intelligence (AI),” stated Eileen Burbidge, spouse at Passion Capital. “This presents enormous opportunity for international investors, and today’s data suggests London’s tech sector has a very bright future.”
However, even though the UK stays at the vanguard of European generation funding, the 28% relief alerts expanding fears surrounding the uncertainty of Brexit.
“In 2018, London was witness to internationally significant tech exits on the size and scale that many would not have deemed plausible just three years ago,” stated Russ Shaw, founding father of Tech London Advocates and Global Tech Advocates.
“Yet, it is without question that politics has re-entered the capital markets as an investment variable, in a big way. Data from across the Global Tech Advocates community revealed that Brexit was damaging Britain’s reputation as an investment opportunity – prompting a downturn in confidence and a willingness to direct funds here.”
Shaw added that each companies and traders want Westminster to offer a way of balance to resume self belief and construct at the growth already made by means of the UK tech sector.
UK tech corporate exits
Despite lowered funding, then again, 2018 noticed 17 exits from UK tech firms, together with style e-commerce company Farfetch and peer-to-peer lending corporate Funding Circle. Sweden had the second-highest collection of exits, with 10 tech Initial Public Offerings (IPOs), adopted by means of France and Germany with 8 and 6 respectively.
Breaking down the UK funding additional, funding into the UK’s AI firms reached £736m in 2018, a 47% build up at the £499m raised the 12 months prior to.
Some £153m of this was once raised by means of AI chipmaker Graphcore by myself, the UK’s latest $1bn tech corporate, in a Series D spherical.
The excessive degree of funding won by means of AI firms in 2018 displays expanding pastime in the generation. “Democratised AI”, for instance, was once the highest pattern in Gartner’s Hype cycle for rising applied sciences record ultimate 12 months, and the UK executive has been pushing for higher adoption of AI for the reason that release of its Industrial technique in November 2017.
Fintech additionally remains to be a significant draw for traders, attracting £1.17bn in undertaking capital funding, 90% of which went to London-based firms. Several of those London fintech corporations in flip reached unicorn standing, together with Revolut and Monzo, which, following renewed funding, won an extra £177m and £84m respectively.
However, companies creating cryptocurrency and blockchain applied sciences skilled report progress in 2018, with UK corporations receiving over £200m, up from £19.1m in 2017, and £51.96m in 2016.
“In 2019, we can expect to see sustained growth across several tech verticals – in particular, big data, AI, blockchain, retail tech and fintech,” stated Shaw.
“It is now essential that we recognise the implications on investment from the other requisite variables. Talent is going to be a major challenge for the tech community, but with a commitment to digital skills across the public and private sectors, Britain will be in a position to thrive.”