In an annual check-in of the UK tech ecosystem during London Tech Week, new data published with Tech Nation, shows that UK tech is well positioned to navigate the Covid-19 crisis. UK tech companies raised $5.3B in Jan-May 2020, with 15 rounds of $80M or more. Year-on-year investments figures do not yet show significant movement from investors.
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VC is a lagging indicator with many deals taking weeks or months to complete and so the full impact may take longer to see, but UK VCs are better capitalized than ever, having raised over $10B in 2019 and 2020 alone. In addition to record levels of VC dry powder ready to deploy, the UK’s £500M Future Fund co-investment scheme opened on 20 May, boosting funding prospects, and already received 464 applications in the first 12 days.
The Mayor of London, Sadiq Khan: “The tech community in London and across the UK has risen to the challenges posed by coronavirus, demonstrating the sector’s resilience and innovation. This new data shows the strength of the industry and I remain confident that London’s position as a global tech hub will continue as we move towards recovery.”
When looking at international comparison, London startups have raised more in 2020 than Paris, Berlin, Stockholm and Tel Aviv combined – though again most of the deals in all territories will have been agreed before the crisis – with Fintech a key strength, accounting for 39% of investment.
Suranga Chandratillake, partner at Balderton Capital: “I’ve been lucky enough to witness first hand just how strong the UK tech scene is, and what a force for positive change it can be for our society and for the economy. These figures demonstrate what we have always felt about the UK tech sector, that it is highly resilient and can continue to go from strength-to-strength even when the terrain gets rough.”
UK tech built on a decade of growth
Over the past 12 months, seven more UK companies – Octopus Energy, Arrival, CMR Surgical, Ebury, Rapyd, Babylon, and Trainline – reached unicorn status, for a total fo 79. The UK leads Europe on unicorns and future unicorns (109 companies valued $250M-$800M), built on a decade of consistent growth since the last financial crisis. A generation of some of the UK’s most prominent tech companies, including Transferwise, Zoopla, Deepmind and Farfetch were born during and after the 2008 financial crisis.
Suzanne Ashman, partner at LocalGlobe: “Startups are by their nature fragile businesses and the Covid-19 crisis is testing them to the limits. But we should be optimistic that the strong foundations laid down in the last decade will help more early stage UK tech companies to emerge from this crisis stronger and better able to compete on a global stage.”
UK tech is a jobs engine
UK tech now employs more than 2.93 million people across the country with salaries that are, on average, £10k higher than other sectors, and 90,000 tech sector jobs were still being advertised at the end of April.
Nicola Mendelsohn, VP EMEA, Facebook: “As highlighted by this report, the UK tech sector continues to flourish, evolve and grow year-on-year, cementing its place on the global stage. Given the current pandemic, it’s important to recognise areas of opportunity such as tech, and equip businesses across the UK with the tools and resources to accelerate their digital transformation so they can re-emerge and recover from this and future downturns.”