UK Edition
Foreign investment in UK technology firms doubles in just one year
The UK’s tech sector is soaring ahead of its competitors in Europe, attracting more venture capital investment last year than Germany, France and Sweden combined.
British tech businesses attracted $7.8bn of funding last year, which was almost double the amount received in 2016. Research by Dealroom and Tech Nation showed that the UK’s venture capital investment last year was higher than Germany’s total of $3.2bn and France, which brought in $2.8bn.
The boost to its tech sector has helped to propel the UK’s growth of foreign direct investment (FDI), helping it to remain the top destination for such funding. According to a report by EY, there was a 22pc increase in digital investment into the UK, which helped to offset a decline in investment to sectors such as a financial services and logistics, due to investor concerns over Brexit. Investment into the UK’s manufacturing sector also remained resilient, and increased by 17pc.
Overall, Britain attracted 6pc more FDI last year than in 2016, but it lost market share to France, where total investment soared by 31pc in 2017, boosted by the so-called “Macron effect”.
Across Europe there was a 33pc rise in investment in digital projects. It was also a record year for the amount of money leaving the UK: there was a 35pc increase in UK businesses investing into Europe, particularly in the financial services and digital sectors.
Steve Varley, EY’s UK chairman, said: “At a time when investor sentiment towards the UK as an attractive destination is weakening, opportunity arises in the shape of digital. An urgent digital drive is needed with a renewed focus on digital skills, infrastructure, and investment in research and development will help to shape the UK as an attractive environment, to maintain its competitiveness in a post-Brexit world.”
The research into the UK’s tech scene has been released to mark the start of London Tech Week. It found that the UK has produced 13 unicorns, which are companies with a valuation of more than $1bn; these have a combined value of $23bn, equal to 37pc of the total value of all European unicorns. This puts the UK ahead of Germany, which has six, and France’s three such companies. Examples of British success stories include Deliveroo and Funding Circle.
Matt Hancock, Secretary of State for Digital, Culture, Media and Sport, said: “These new figures show the UK is the digital dynamo of Europe and we are achieving our goal to be the best place in the world to start and grow a tech business.”