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UK tech sector sees surge in foreign investment
The latest data suggests the UK tech sector is on track for its best year ever, with the potential to attract up to $11bn in investment by the end of the year
UK tech firms have seen a surge in foreign investment, with over half of the $6.7bn raised this year coming from American and Asian investors.
The new figures, prepared by Dealroom.co and entrepreneurial network Tech Nation for the government’s Digital Economy Council, show that the UK tech sector is on track for its best year to date if the current trajectory continues, with a projected $11bn to be invested before the end of 2019.
For comparison, UK tech firms raised a total of $8.7bn between January and December last year.
The data suggests that UK tech is attracting more foreign capital per capita than both the US and China, largely due to keen interest from American and Asian investors who collectively invested $3.7bn, or 55%, of this year’s total so far.
Since 2013, American and Asian investors have put a total of $14.6bn into the sector, compared to $6.5bn and $2.5bn respectively into Germany and France’s tech sectors.
However, the UK is still one of the top European countries for home-grown funding, with 37% of tech investments coming from domestic sources. Only France and the Netherlands exceed the UK in terms of domestic funding.
“It is incredibly gratifying to see that in addition to domestic and European investors, British tech innovators are also attracting US and Asian investor attention and allocation,” said Tech Nation chair, Eileen Burbidge.
“The fact that this is growing is a testament to the strength and depth or our entrepreneurial talent, coupled with the dynamic and deeply engaged ecosystem that has been established here in the UK.”
Concentrated investment
Out of the $3.7bn in foreign investment, roughly $3.2bn went to just nine companies, including $230m to fintech Checkout.com, $800m to supply chain finance company Greensill and $575m to London natives Deliveroo.
Speaking to Computer Weekly, George Windsor, head of insights at Tech Nation, said this concentration of investment could be a positive development in the long run.
“These companies add an awful lot more than just the investment that’s made into them, and there are lots of positive spillovers,” he said.
“They’re able to invest in talent, the ecosystem and new market developments, and we know that has a positive uplift on the economy as a whole.”
The figures from Tech Nation further show that, since 2016, the UK’s top 30 tech startups generated 5,000 new jobs, meaning they now collectively represent more than 15,000 employees.
Windsor added that the nine companies also represent a broad cross-section of the UK tech sector, providing a strong base for future growth.
“One of the interesting things is that the investment is not just within some of those areas that the UK is renowned for being strong in, like fintech, artificial intelligence and cyber security, but it’s really quite broad-based, and that’s healthy for the overall ecosystem,” he said.
Despite Brexit looming, Windsor claims global investor interest in the UK increased by 147% since 2018, largely because of American and Asian investors.
“It really facilitates not just capital flows into the UK, but the flow of knowledge and people as well. Trying to stimulate that sort of international connectivity across the world is really important bearing in mind Brexit,” he said.
Read more about tech investments
- A Tech Nation programme to support the UK’s financial technology startups demonstrates the increasingly diverse range of business-to-business products and services available through the country’s fintech community
- The UK leads Europe in scaleup investment, with technology scaleups delivering 80% of the country’s entire £6.3bn tech investments in 2018.
- More established UK fintech’s were the biggest recipients of investment in the first half of this year, which demonstrated that businesses are maturing.
