VC funding for UK tech start-ups breaks new record

Over £10bn of VC funding for UK tech start-ups last year, a 44% year on year increase

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Record year: British tech start-up investment outpaced the US and China in 2019

Venture capital funding for UK tech firms reached $13.2bn (£10.1bn) in 2019, a 44 per cent increase year on year and an all-time record.

Britain surpassed growth in all other countries, including the US and China, where investment fell by 20 per cent and 65 per cent respectively.

The US and China still dwarf the UK in terms of total investment, however. Technology businesses in those countries raised $116bn and $33.5bn respectively in 2019.

>See also: VC backing for UK scale-ups rockets by 22% in 2019, hitting £9bn

Data from TechNation and Dealroom for the government’s Digital Economy Council reveals the UK netted one third of Europe’s £30.4bn total, receiving more funding than Germany and France combined, which came in second and third at £5.4bn and £3.4bn.

The top performing sectors of 2019 were fintech, artificial intelligence and clean energy. Fintech continues to be the UK’s standout VC tech funding sector, more than doubling its total in 2018 to reach £5.4bn last year – three times more than in Germany, and 7.5 times more than in France. UK medical technology companies also had a bumper year, with surgical robots business CMR Surgical raising £195m and artificial intelligence doctor app Babylon raising $550m.

London birthed eight unicorns – companies valued at more than $1bn (£768m) – last year, taking its total to 77. These included fintech startups Sumup and Checkout, as well as Ovo Energy, Babylon Health and Trainline.

The capital was the fourth best city in the world for technology start-up funding behind San Francisco, Beijing and New York.

Both UK start-ups and VCs themselves have benefited from an influx in capital from the US and Asia, as concerns grow about inflated valuations and botched IPOs with companies such as WeWork and Uber, and political instability in the Far East.

>See also: Technology venture capital investment falls for first time in seven years

Europe, which has been seen as more stolid than the US when it comes to hype, could benefit in the long-term, as investors have not drunk the Kool-Aid.

The record VC funding for UK tech start-ups comes despite earlier concerns that Brexit would cut off growth in the sector and push promising start-ups to move elsewhere in Europe.

However, one anonymous investor warned the Financial Times that many start-ups in Europe are getting funded which shouldn’t be and there is far more cash around than worthwhile investments.

And another anonymous source told the Daily Telegraph that last year’s record VC funding for UK tech start-ups would have been higher without the distraction and uncertainty prompted by Brexit over the last three years.

Felix Capital raises $300m

Meanwhile, Felix Capital, the venture capitalist whose investments include lifestyle brand Goop and fitness firm Peloton, has raised a further $300m.

The London-based VC firm now has $600m under management, investing mainly in early stage and selective scale-ups, both in Europe and the US.

In addition, Felix has taken on two new advisors, Thijn Lamers, ex-EVP of Adyen and Andrew Robb, former COO at Farfetch, and has also hired David Oglesby, ex Bridges and BC Partners, as a new CFO.

Felix, which currently has 32 company investments in eight countries, typically invests early in either first or second rounds, typically anything from $500,000 to $10m. It invests up to $15m in later-stage scale-ups.

Over the past year, Felix has made substantial investments in TravelPerk ($104m), Miraki ($70m) and Mejuri ($23m).

 

 

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