UK leads Europe on VC investment despite Brexit uncertainty

UK startups raised £10.84 billion in 2020 to break funding records for the second year in a row

UK startups benefited from a record-breaking level of venture capital (VC) investment in 2020, despite difficult economic conditions created by Brexit and the global COVID pandemic.

At $15 billion (£10.84 billion), the UK once again led Europe in VC investment in tech and was ranked third globally after the US (£104.33 billion) and China at (£32.25 billion), according to the latest report by Tech Nation.

The UK’s 2020 VC investment broke records for the second year in a row, having increased its investment by $200 million (£144.5 million) since 2019. In fact, the country made moves to close the gap with China, which faced a drop in investment in both 2019 (-50%) and 2020 (-3%). 

Moreover, Brexit didn’t seem to hinder the UK’s ability to remain open to overseas investment. Last year, 63% of 2020 investment (£6.79 billion) in UK tech came from overseas, compared with 50% (£2.17 billion) in 2016. According to Tech Nation, overseas financing represented 84% of total investment at the $250m+ mark, up from 54% at Series A.

A graph by Tech Nation showing global VC investment for 2020

Tech Nation found that the UK’s investment gained momentum throughout the year, reaching a peak in December 2020. This growth was driven by UK tech hubs such as London, Oxford, Bristol, Edinburgh, and Cambridge – home to the UK’s ‘tech crown jewel’ ARM as well as startups such as FiveAI.

However, Tech Nation also warned that the UK must provide more support to regional tech clusters, as their collective strength can be credited with helping the nation achieve the title of a world-leading tech centre.

Despite this, the focus continues to be placed on London alone, with the percentage of total UK VC investment made in London increasing from 73% to 88% between 2018 and 2021. Tech Nation suggested that tech hubs outside of the capital should be supported by the development of more targeted regional investment funds.

Commenting on the report, Tech Nation founding chief executive Gerard Grech said that “in the face of a major global crisis, [the UK] has not only survived; in many areas, it has boomed”. 

Related Resource

MLOps 101: The foundation for your AI strategy

What is MLOps and why do you need an MLOps infrastructure?

How to build a foundation for AI strategy - whitepaper from DataRobotDownload now

“From EdTech to HealthTech, tech scaleups are at the centre of rebuilding the British economy and setting new standards worldwide,” he said, adding that “developing Britain’s AI-powered deep-tech is especially critical” for the UK’s future.

“Much of our future economy will be built on this new technology that leverages machine learning for faster innovation. Bold investment is needed in R&D to boost Britain’s new deep-tech companies and ensure our global competitiveness.”

Prime minister Boris Johnson said the UK “is maintaining its lead as one of the world’s premier centres for tech of all kinds”. 

“While the real credit lies, as ever, with the engineers and designers toiling away at laptops across the country, I’m immensely proud to lead a government that is so comprehensively committed to supporting the sector. We’re continuing to invest in your success, and I hope that the winning combination of UK tech and this government will lead us to yet another record-breaking year in 2021,” he added.

Featured Resources

How to choose an AI vendor

Five key things to look for in an AI vendor

Download now

The UK 2020 Databerg report

Cloud adoption trends in the UK and recommendations for cloud migration

Download now

2021 state of email security report: Ransomware on the rise

Securing the enterprise in the COVID world

Download now

The impact of AWS in the UK

How AWS is powering Britain's fastest-growing companies

Download now

Recommended

How Brexit fuelled Lithuania’s ambitions to become Europe’s fintech capital
Business strategy

How Brexit fuelled Lithuania’s ambitions to become Europe’s fintech capital

31 May 2021
So you want to work for a tech startup? It’s not all ping-pong tables and yoga
startups

So you want to work for a tech startup? It’s not all ping-pong tables and yoga

22 Dec 2020
The IT Pro Podcast: Is the sun setting on Silicon Valley?
Business strategy

The IT Pro Podcast: Is the sun setting on Silicon Valley?

18 Dec 2020
TechUK urges government to level digital divide
digital divide

TechUK urges government to level digital divide

7 Dec 2020

Most Popular

Q&A: Enabling transformation
Sponsored

Q&A: Enabling transformation

10 Jun 2021
OnePlus 9 Pro review: An instant cult classic
Hardware

OnePlus 9 Pro review: An instant cult classic

7 Jun 2021
Ten-year-old iOS 4 recreated as an iPhone app
iOS

Ten-year-old iOS 4 recreated as an iPhone app

10 Jun 2021