2019 saw UK-based technology start-ups attract record breaking levels of investment. A total of £10.1 billion was injected into young tech-centric companies over the course of the year – representing growth of over 44% on the £7 billion investment over 2018. The total meant that the UK’s tech start-up sector was second only to the USA and China in terms of total investment capital attracted. The sum is also more than the combined investment into tech start-ups from Germany and France. Both countries have larger populations than the UK.
The record investment came despite a back-drop of Brexit uncertainty, marking the UK out as Europe’s capital for high growth, tech-enabled start-ups. The data is part of report published today by Tech Nation, a government-funded organisation set up to promote the UK’s tech sector.
Of the total £10.1 billion invested in UK-based tech start-ups, £7.4 billon was raised by companies operating from London. Five start-ups raised over $250 million each, three of which took in over $500 million in one investment round. Just below that level was Checkout.com, a fintech that acts as a bridge between merchants with e-payment providers such as Paypal and Apple or Google Pay. It attracted a $230 million investment last May.
The most investment capital was raised by supply chain finance start-up Greensill, which raised over $1.4 billion across two rounds that took place in 2019. The fintech sector was the tech sub-sector that attracted the most capital. Online-only banks Monzo and Starling and fintech business lender Oaknorth all raised significant sums that contributed to a total of £4.1 billion flowing into fintech start-ups. That more than doubled the sub-sector’s investment capital total from 2018.
As well as documenting the investment figures that UK-based start-ups raised over 2019, the Tech Nation report also looked to the future. The body believes that even continuing uncertainty around the UK’s future trade ties with the EU, the country will continue to produce start-ups that will attract investment.
That’s based on the fact that technology investors have continued to pump money into UK start-ups despite stagnation in the wider business investment environment over the past couple of years. Tech Nation calculates that VC investment have shown over 40% growth over each of the past three years since the Brexit referendum result.
The tech sector is expected to be less impacted by eventual border controls and new tariffs than others that deal in physical products. Higher average salaries for professionals in the digital sphere should also mean tech start-ups experience less difficulty in securing work visas for highly skilled professionals when freedom of labour movement with the EU ends.
2019 also saw a total of eight UK tech start-ups achieve unicorn status by securing funding against valuations of more than $1 billion. Checkout.com was one and Rapyd another new fintech unicorn. Meditech companies also saw two new unicorns in the shape of medical robotics designer CMR Surgical and diagnostic app developer Babylon Health.
In the last twenty years, double the number of companies that have achieved a valuation of over $1 billion have come out of the UK, compared to Germany, which has the next best record in Europe for producing billion-dollar companies. The UK has been the conveyor belt for a total of 77 billion-dollar businesses.