UK technology industry raises £13.5bn in VC funds in H1

london-2Covid-19 may have left thousands of businesses struggling but the UK’s tech sector has seen off the pandemic in style, and is on course for a record year of investment with a host of mega deals sending venture capital investment soaring to £13.5bn in the first six months of the year alone.

The H1 total tops the figure achieved in the whole of 2020 and is almost triple what was achieved halfway through 2020.

The figures, compiled for the UK’s Digital Economy Council and Tech Nation by Dealroom for London Tech Week, show how the UK continues to extend its lead over rival European hubs, attracting more venture capital investment than France, Germany and Israel combined during 2021.

A handful of huge fundraising rounds by leading UK tech companies have helped push the total VC raised into record territory more than half of all funds raised this year have been for more than $100m.

Notable deals included neobank Revolut, which raised £577m at Series E; Cinch, the car sales platform, which raised £1bn; cybersecurity platform Snyk, which raised £289m at Series E; and Hopin, the online events company, which raised £289m at Series C.

Over 1,400 UK tech companies have benefited from the £13.5bn raised and the investment is more than double that achieved by Germany (£6.2bn), the next biggest market.

The UK is now home to 105 unicorns – private companies worth $1bn or more – with 20 created in the past six months alone.

The number of futurecorns – high-growth companies with the potential to become unicorns – is also growing, with 153 possible candidates in the UK. Some of the top futurecorns in the UK are the digital bank Zopa, global kids entertainment company Moonbug, and direct-to-consumer letterbox flowers platform Bloom & Wild. The UK is also home to 12 tech companies worth over $10bn, with seven created this year.

Fintech continues to dominate the majority of investment rounds, with the sector attracting £4.2bn in the first six months of the year. The sector also accounts for 11 of the 20 companies that became unicorns in the first six months of 2021.

HealthTech is second, with £2.7bn raised, then enterprise software, at £1.3bn. Both sectors have benefited from a surge in investor and user interest arising from the pandemic.

Three other sectors have also seen a significant uplift in year-on-year investment: robotics – 12.8 times higher than last year; event tech which has raised 7.2 times higher than in 2020 and jobs recruitment, which has raised 5.9 times more than at the same point in 2020.

After London, the city which has attracted the most in VC funding so far this year is Oxford, followed by Bristol, Birmingham and Cambridge.

Startups in Scotland have raised £53.5m so far this year, including a £35.9m round by alternative protein company Enough and a seed round by the on-demand workspace platform while tech companies have raised £18.8m in Northern Ireland.

In response to the report, Yobota head of sales Ion Fratiloiu said: “These latest figures reflect the resilience of the UK’s tech industry, even in the face of huge uncertainty. It is promising, yet unsurprising, to see that fintechs make up 11 of the 20 businesses that reached unicorn status in the first six months of 2021. Indeed, the UK now finds itself at the cutting edge of fintech innovation, having gone from strength to strength in recent years.

“The accelerated move to digital during the pandemic has naturally created new opportunities for investment and growth over the past 18 months. At the same time, customers’ changing habits have encouraged businesses to explore their capabilities and implement new features to adapt to growing trends – Monzo and Revolut’s recent move into the buy now, pay later space is just one prime example of this.

“Ambitious tech businesses across the UK will certainly play an important role in helping to rebuild the economy, and we will no doubt continue to see these companies breaking many more funding records in the years to come.”

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