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Record UK VC funding tops $15B for the first time in 2020

As 2020 draws to a close, we’ve put together our annual review of UK tech capital flows with Tech Nation and the Digital Economy Council. Remarkably UK startups and scaleups have raised more investment in 2020 than in any previous year. VC investment topped $15B for the first time, ahead of $14.8B raised in 2019.

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The venture capital investment in UK companies was helped significantly by a series of mega-rounds raised by companies including challenger bank Revolut and new digital insurance provider Ki, which both secured $500m in funding. In the final weeks of December significant rounds for GoCardless’s ($95M) and Octopus Energy ($200M), helped push 2020 into record territory.

Suranga Chandratillake, partner at Balderton Capital said: “Attracting $15bn worth of investment is an astounding feat for the UK’s tech industry. It’s great to see the success of the industry spanning both different areas of the UK, and different sectors, including fintech, e-commerce and green energy. This year has demonstrated the resilience of the tech community, its companies and its teams. To ensure our continued success and recovery next year, we need to build back with diversity and inclusion in mind.”

See every round

Greg Jackson, CEO and Founder of Octopus Energy said: “Decarbonisation of the planet must be our number one priority, and technology holds the key to achieving this faster and cheaper than previously imagined. Disruptors like Octopus Energy have already shown that great value and service can be delivered by technology, and we are now proving that a smart grid will ensure that green electrons are cheap ones. The UK has led the way on renewables and is increasingly demonstrating that this country can become the Silicon Valley of Energy.”

UK unicorns

The UK created seven new unicorns this year, taking the UK’s total to 80. Hopin became one of the big UK success stories of 2020, when its lockdown growth attracted a $125m round raised at a valuation of $2.1bn.

The UK also has 136 potential unicorns –  companies with a value of $250m to $800m. This is more than twice as many as Germany and France, the European countries with the next largest pipeline of future unicorns (61).

Ronan Harris, VP and MD, UK and Ireland, Google said: “This is an exciting time to be part of the UK tech industry. Dynamic businesses are born out of challenging times and the investment going into UK startups and scaleups is a clear sign that investors think UK companies are the ones to watch. Google is very happy to be a part of this ecosystem and looks forward to the next year.”

Funds for future investment

European venture capital is disproportionately based in the UK. The UK raised 45% of new European VC funds in 2020. Having raised $14B in 2019 and 2020 alone, the UK is home to record levels of dry powder ready to deploy in 2021 and beyond.

See new funds raised

Julia Hawkins, partner, LocalGlobe said: “The UK tech industry has been growing at a rapid pace and the contributions that have been made to the ecosystem over the years, by entrepreneurs, investors, networks, and hubs, are a testament to the amazing growth it has achieved this year. As we continue to make strides in research and investing over the next few years in areas such as AI and deep tech, many more new startups will be founded.”

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Laura Citron, CEO at London & Partners said: “The UK’s tech sector has demonstrated its resilience and creativity this year. London and tech hubs across the UK are home to some of the world’s most innovative companies and we’ve seen many fantastic examples of tech businesses that have adapted to help both the local and global response to the pandemic. Today’s positive job and investment figures offer further proof that the UK’s tech ecosystem has an important role to play in the recovery and the opportunity to build back a more sustainable, fairer society.”