International investors in traditional asset classes such as equities might be giving the UK a wide berth at the moment in favour of markets shrouded in less uncertainty. But Brexit doesn’t seem to be discouraging international investors in UK-based tech start-ups. Not only is foreign capital flowing into promising young British tech companies undeterred but was a huge 50% up over the first six months of 2019 compared to the same period last year.

Tech start-ups have attracted a total of £5.5 billion in new funding from non-British investors. If the current trajectory is maintained that should rise to £9.06 billion by the end of the year – a big increase on 2018’s total of £7.16 billion. The data comes from the UK’s digital economy council and indicate that the UK is the most successful country in Europe when it comes to producing tech start-ups that attract international capital.

The biggest international investors in UK tech start-ups are private equity and VC funds from the USA and Asia. Investors from these regions have poured over £12 billion into UK start-ups over the past five years compared to just £5.35 billion worth of investment into German start-ups. French start-ups have attracted just £2.06 billion over 5 years.

A couple of bid deals did, however, make a significant contribution to the overall total. The two biggest financing rounds closed over the period were by food delivery app Deliveroo and Ovo Energy, a tech-enabled electricity and gas supplier.

Nicky Morgan, secretary of state for digital, culture, media and sport yesterday commented:

“These fantastic figures show the confidence overseas investors have in UK tech. We have a longstanding reputation for innovation and the statistics endorse our reputation as one of the best places in the world to start and grow a digital business.”

So why are investors in tech start-ups so much less concerned about the possible impact of Brexit compared to other investors? There are a few key reasons why the sector would be expected to take less of a hit over the next couple of years. Tech companies tend not to rely on the kind of supply chains that Brexit could disrupt and they also usually don’t have business models reliant on importing or exporting physical goods. Possible changes to immigration policies would also be expected to have less of an impact as salary levels tend to be higher in tech and any immigrant employees highly skilled and qualified. Many tech companies also take advantage of remote offices.

One problem that could arise for the tech sector in the event of a hard or no-deal Brexit is a lack of clarity what will happen with data sharing arrangements that control how information is sent back and forth between data centres in the UK and EU. However, the continued level of investment coming into tech start-ups in the UK suggests that those controlling the purse strings are not overly concerned. The UK has produced a total of 72 ‘tech unicorns’ over the past 20 years – defined as companies with a valuation of at least $1 billion. Germany, our closest European rival, has been home to just 26 unicorns over the same period.