2021 is set to be a record year for UK tech sector start-up investment with recent figures indicated more funds were raised over the first six months of the year than in the whole of 2020. New data published by the government-backed tech sector industry support body Tech Nation and start-ups data firm Dealroom estimated UK-based tech start-ups attracted £13.5 billion in new investment capital over the first half of the year.
The total funds, split between a total of 1400 private tech companies, have now surpassed last year’s figure over twelve months, boosted by big deals involving fintech Revolut, digital car sales platform Cinch and virtual events company Hopin.
The UK’s privately-owned tech sector investment-raising success this year is not unique. The valuations of private tech companies are booming globally as investors hunt for returns in an environment of low interest rates and accelerating inflation. The Covid-19 pandemic’s influence in accelerating the move towards a more digital economy has also been significant.
But the UK has still outperformed most of the world, with only U.S. and China-based private tech companies attracting higher levels of investment. The £13.5 billion UK tech start-ups attracted was more than double the total of Germany (£6.2 billion) our closest European rival and in fourth position in the global league table. In fact, UK companies secured more investment capital than those in Germany, France and Israel combined.
20 UK-based tech companies also achieved ‘unicorn’ status over the first half of 2021, by securing investment at a valuation of at least $1 billion. Among them were the second-hand clothes trading app Depop, which was acquired by Etsy, as well as insurtech start-ups Tractable and Zego.
The UK also now boasts a total of 10 privately-owned decacorns worth over $10 billion. The most valuable tech company from the UK is currently Revolut, which raised $800 million in July at a valuation of $33 billion. It last raised funds in 2020 at a valuation over six times lower than this year’s.
Fintech is the tech sub-sector to attract most new investment in UK start-ups this year, bringing in £4.2 billion. 11 of the 20 British unicorns are classified as fintech companies with Revolut, Checkout.com and the recently-listed Wise among the best known.
Among the biggest tech raises in Europe were the $2.75 billion raised by Swedish battery start-up Northvolt and buy now, pay later fintech Klarna, also from Sweden, also raised $639 million at a $46 billion valuation.