Investment in UK Tech startups remains strong despite shutdown

According to figures compiled by Tech Nation and Dealroom for the Digital Economy council, investors have continued to back UK tech companies, despite the economic challenges posed by Covid-19.

The Covid-19 crisis has highlighted the integral role that technology plays in both our society and economy. It has allowed us to maintain some semblance of normality; from keeping us connected to work places, friends and family to enabling us to order any number of items right to our doorsteps. The measures put in place to stem the spread of the virus have accelerated digital adoption and innovation from businesses and this is set to continue as social distancing remains in place.

From January to the end of May, tech companies in the UK raised $5.3 billion (£4.2billion), compared to a total of $4.1 billion (£3.3 billion) raised in the rest of Europe. Tens of thousands of tech jobs were advertised in cities across the UK in 2020 with salaries continuing to increase above inflation across almost all regions.

In particular, London has solidified its place as a global tech leader with companies based in the capital raising $4 billion (£3.2 billion) since the start of January - more than Paris, Stockholm, Berlin and Tel Aviv combined. Financial technology startups accounted for 39% of the new capital, followed by enterprise software developers with 19%.

Digital Secretary Oliver Dowden said: “The UK’s tech sector has shown resilience in these challenging times and the levels of investment in the year to date have consolidated our Europe-leading position.

“We have a vast pool of talent in the country’s digital and tech firms who have played a big part in supporting communities across the UK and beyond throughout the pandemic and I applaud them for their ongoing efforts.

The government will continue to champion and support the sector as it navigates the months to come as we step up our Coronavirus recovery plans. We will back entrepreneurs, encourage innovators and help businesses make the most out of the opportunities the digital and tech world provides.”


However, the study by Tech Nation and Dealroom cautions that many of the deals were agreed before the full impact of Covid-19 became apparent. Founders have had to scale back valuations, ‘reset’ expectations and acknowledge that capital inflows in the second half of the year are expected to be lower than the record levels set in 2019.

Despite this, the appetite from investors to back future tech champions remains strong and the challenges presented will only serve to fuel further innovation.