Investment in UK digital tech

The UK received more digital tech investment than any other European country in 2016. This is important as access to funding is one of the biggest challenges faced by all startups and scaling businesses. The amount of capital invested into a nation’s digital tech economy is a good indicator of the ecosystems strength.

The UK attracted £28 billion in tech investment over the past 5 years – more than any other European country

 

Country Digital Tech Investment (£BN) 2012-2016
UK 28
France 11.4
Germany 9.3
Netherlands 8.6
Italy 4.2
Denmark 4
Ireland 3.7
Sweden 2.8
Spain  2.2

Source: Pitchbook, Tech City UK, 2016

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Over the past five years, the UK digital tech economy has attracted more venture capital (VC) and private equity (PE) than any other European country, standing at £28 billion.

This is testament to the UK being Europe’s digital epicentre. With impressive access to capital and skills, some of the world’s leading universities and a highly evolved digital tech ecosystem, the UK is a magnet for international investment.

In 2016 the UK attracted more digital tech investment than any other European country, at £6.8 billion

That is considerably more than its closest competitor on this measure, France, which secured £2.4billion.

Since access to funding is one of the biggest challenges faced by all startups and scaling businesses, the amount of capital invested into a nation’s digital tech economy is a useful indication of its health.

Country Digital Tech Investment (£BN) 2016
UK 6.8
France 2.4
Germany 1.4
Netherlands 1.3
Italy 0.9
Denmark 0.9
Ireland 0.8

Source: Pitchbook, Tech City UK, 2016

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In 2016 London received £2.2 billion in VC and PE investment, more than any other European city

In 2016, the overall number of VC and PE backed startup deals fell across the 10 largest European digital tech hubs , and digital tech investment was 34% lower than in 2015.

This is perhaps reflective of a broader global correction, following record inflows during 2015. It might also reflect a mood of increased caution amongst investors, in the face of heightened economic and political uncertainty across Europe and the US. Nevertheless, London remains a major centre for investment, attracting £2.2 billion in 2016, around £1 billion more than its two closest competitors, Amsterdam and Paris.

City Digital Tech Investment (£BN) 2016
London 2.2
Paris 1.2
Amsterdam 1.1
Copenhagen 0.8
Milan 0.8
Dublin 0.7
Berlin 0.6
Stockholm 0.3
Madrid  0.1

Source: Pitchbook, Tech City UK, 2016

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London attracted £13.8 billion in tech investment over 5 years

City Digital Tech Investment (£BN) 2016
London 13.8
Paris 3.6
Amsterdam 3.3
Copenhagen 3
Milan 2.9
Dublin 2.8
Berlin 1.7
Stockholm 1.5
Madrid  0.9

Source: Pitchbook, Tech City UK, 2016

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Over the past 5 years London has been the digital epicentre for tech investment in Europe. It has attracted more investment than Paris, Berlin and Amsterdam combined at £13.8 billion.

Between 2015 and 2016 UK Investment in UK clusters beyond London grew by 50% to £4.6 billion

The shape of digital tech investment in the UK is changing. Last year, two-thirds (over £4.6 billion) of such investment was recorded outside of the capital.

That is more than 50% higher than investment outside of London in 2015. Six clusters alone attracted nearly £700 million investment between them in 2016:

  • Edinburgh – £159 million
  • Cambridge – £153 million
  • Bristol & Bath – £109 million
  • Oxford – £106 million
  • Manchester – £78 million
  • Sheffield – £61 million
Cluster Digital Tech Investment (£MN) 2012-2016
Edinburgh 159
Cambridge 153
Bristol & Bath 109
Oxford 106
Manchester 78
Sheffield  61

Source: Pitchbook, Tech City UK, 2016

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Year % of Digital Tech Investment in UK clusters (excl London)
2012 74%
2013 34%
2014 44%
2015 40%
2016 68%

Source: Pitchbook, Tech City UK, 2016

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These figures testify to a diversifying investment landscape which, we believe, will provide a boost to regional economies and drive higher productivity across the nation.

32% of UK digital tech businesses cite access to finance as a challenge

Access to Finance Challenge

However, although the distribution of investment is changing, limited opportunities to access finance remain an issue for a third (32%) of UK digital tech businesses. The issue is particularly pronounced amongst smaller businesses. Over two fifths (44%) of those with fewer than ten employees cite access to finance as a problem.

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