In the first three months of the year, UK tech firms raised a record $11.06bn, up from the $7.74bn raised in the first quarter of 2021
More than 950 UK tech companies have raised a combined £12.4bn ($15.24bn) in the first five months of 2022 against a backdrop of slowing growth in global public markets.
In the first three months of the year, UK tech firms raised a record £9bn ($11.06bn), up from the £6.3bn ($7.74bn) raised in the first quarter of 2021. During that period the UK overtook India and China for tech investment, behind only the US globally.
The data was gathered by Dealroom and analysed for the UK’s Digital Economy Council ahead of London Tech Week.
Despite a record first quarter, there are signs that the UK’s private investment markets are beginning to slow.
Investors globally are taking a more cautious approach than last year amid rising interest rates and economic uncertainty caused by Russia’s invasion of Ukraine.
Startups that have previously raised money at eye-watering valuations are now raising at lower valuations – or struggling to raise capital at all.
While there has been a modest slowdown in UK investment over the last two months, the overall total so far this year has already surpassed the £12bn ($14.75bn) raised in the whole of 2020.
Similarly, US investors have already poured more capital (£6.1bn/$7.50bn) into UK tech companies than they did for the whole of 2021 (£6bn/$7.37bn).
Despite the wider global challenges that have led to a slowdown in public markets, private tech investment in the UK is continuing to grow, said Yoram Wijngaarde, founder and CEO at Dealroom.
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, Wijngaarde said.
Wijngaarde 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.
Fintech has come out as the strongest sector for UK tech investment this year with £6.2bn ($7.62bn) raised by fintech startups and scaleups already this year.
After fintech, healthtech was the second-most popular sector for investment so far in 2020, with around £791m ($972.08m) invested.
Impact tech companies, which are using technology to solve challenges including climate change, are continuing to grow and scale across the UK. Last year, over £2.7bn ($3.32bn) was invested in impact startups — representing the most ever, in a single year.
Taavet Hinrikus, co-founder of Wise, added: I’ve been investing in startups across Europe for nearly 15 years and the past 12 months have been unlike any I’ve experienced. I believe we’re at the start of a new frontier for technology and I hope to find and support the next 100 iconic companies that will be started in the UK and grow into global giants.