UK continues to be the most attractive destination in Europe for Asian venture capital tech investors
British tech companies attracted a record $2.8bn worth of VC funding
Global tech investors are increasingly pumping large sums of money into European tech companies, with 2019 representing a record year for venture capital funding across the continent. According to research prepared for London & Partners and Tech Nation by Dealroom.co, London has led from the front, with the UK capital’s tech companies attracting $9.7bn in funding last year – more than any other European city.
The UK continues to be the most attractive destination in Europe for Asian venture capital tech investors, with British tech companies attracting a record $2.8bn worth of VC funding. Despite the Brexit vote, investment from Asia into the UK was higher than any other European country, with the likes of Germany ($0.5bn) and France ($0.2bn) lagging far behind.
Total VC funding for London’ sector rose by an unprecedented 87 per cent in 2019, with $4.5bn more than the $5.2bn raised in 2018. Major funding rounds for London companies in 2019 included: a $800m mega-round for London based insurance tech company, Grensill; a $575m Series G round for Deliveroo and a $440m in funding for London-headquartered fintech company, OakNorth.
Further analysis of the research shows that European tech cities such as London, Paris and Berlin are competing for investment on the global stage, joining the likes of New York, Beijing and the Bay Area at the top of the league tables.
London also remains the top place in Europe for creating high growth tech businesses, with the research revealing that the UK capital has created 46 unicorn companies. Some of the London companies joining the unicorn club in 2019 included: Checkout.com, Babylon and Sumup.
At a national level, the UK’s tech sector was also boosted by the news that it has added a further eight billion-dollar companies to its list of unicorns – taking its total number of tech giants to 77.
The amount being invested in early-stage UK companies also increased, reaching $5.1bn in 2019 up from $4bn the year before. At the higher end of the scale, a total of $5.4bn was invested in rounds exceeding $100m in 2019 – more than twice the amount invested in such rounds during the same period last year. Of the highest-value UK rounds, five companies raised more than a quarter of a billion dollars each, and three of those exceeded half a billion in a single round.
2019 saw the largest ever Series A investment, made in payments processor Checkout.com ($230m) in May, and the largest UK round of all time, which saw $800m being invested in supply-chain fintech Greensill in October just five months after the company had raised $655m.
UK growth outstrips every other country worldwide
The number of rapidly growing UK tech companies soared as investment in the UK was 44% higher in 2019 than the year before, marking the third year in a row where growth has exceeded 40%. This most recent increase cemented the UK’s place as the fastest-growing tech ecosystem in Europe.
To put this growth into perspective, investments in France grew a little over a third compared to 2018, while Israel’s investments rose by a fifth. The US and China, instead, both saw investment numbers plummet by 20% and 65% respectively.
Almost half of the UK investments ($6bn) in 2019 came via US and Asian investors and the UK tech sector recently overtook the US for foreign investment per capita. What’s more, when compared to Germany and France, the UK had the widest overall mix of foreign versus domestic investors.
Unicorn capital of Europe
Since 2014, the UK has produced more than twice the total number of $1bn tech companies than any other country in Europe, and sits behind only the US and China when it comes to building the world’s fastest-growing firms.
In 2019, eight British companies reached this unicorn status – Rapyd, CMR Surgical, Babylon Health, Sumup, Trainline, Acuris, Checkout.com and OVO Energy – meaning the UK is now home to 77 billion-dollar businesses, double the total number in Germany (34) and almost four times as many as Israel (20).
And while London remains the leading city for unicorns in the UK, having produced a total of 46 since 1990, Manchester, Oxford, Cambridge, Edinburgh, Dublin and Bristol have produced a combined total of 24. Of the latest unicorns to join the list, OVO Energy adds to Bristol’s tally while Cambridge-based CMR Surgical pushes Oxbridge’s total to 11.
What’s more, a further 96 startups and scaleups have been listed as having the potential to reach unicorn status in the coming months.
Among those companies identified as future unicorns by Tech Nation and Dealroom.co are Raspberry Pi, the low-cost computer company, challenger banks Atom and Starling, and children’s entertainment company Moonbug.
UK leads the way in Fintech, AI and clean energy
These deals also fuelled, in part, a surge in the UK’s best performing sectors – fintech, AI and deep tech, and clean energy in 2019.
Again, when compared with Germany and France, UK fintech firms raised $5.38bn last year – an impressive 7.5 times the amount raised by French fintechs, and three times as much as fintech firms in Germany.
This $5.38bn figure represents a 100% increase from 2018’s total of $2.7bn, as a result of both the Greensill and Checkout.com deals plus strong performances from the likes of World Remit ($197m), Monzo ($147m) and Starling Bank ($98m).
In AI and deep tech, investments in Benevolent AI ($90m), Melody ($60m) and Wayve ($20m) helped push the investment total across these sectors to $3.2bn – up from $2.6bn from 2018, and twice that invested in Germany and France’s respective sectors.
The Mayor of London, Sadiq Khan said: “London's tech sector is a global success story and one that I continue to champion, particularly as it reflects our city's diversity and entrepreneurial spirit. Our city is the undisputed tech capital of Europe and the record $9.7 billion of investment in this sector clearly shows London open to talent and investment from all over the world. London’s successful digital economy is not only an important source of jobs for Londoners but is also bringing prosperity and growth to the rest of the UK."
Hemin Bharucha, Chief Rep for London & Partners in India said: “Today’s positive tech investment figures for India and the UK demonstrate that we are both top destinations for global investors. Cities such as London, Mumbai, and Bengaluru are increasingly creating game-changing companies to compete on the global stage and we see lots of opportunities to collaborate with India, especially in areas such as smart cities and fintech. It’s also great to see that investment from Asia into the UK increased significantly in 2019, offering further proof of the strength of London and the UK’s tech growth.”
About London & Partners
London & Partners is the Mayor of London’s official promotional agency. Its purpose is to support the Mayor’s priorities by promoting London internationally, as the best city in the world in which to invest, work, study and visit. We do this by devising creative ways to promote London and to amplify the Mayor’s messages, priorities and campaigns to international audiences. Its mission is to tell London’s story brilliantly to an international audience. London & Partners is a not-for-profit public private partnership, funded by the Mayor of London and our network of commercial partners. For more information, visit: www.londonandpartners.com
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