UK technology firms secured £6.8bn of venture capital (VC) and private equity (PE) funding in 2016 – that’s more than 50% higher than any other European country, according to the sector’s leading business accelerator Tech City UK.
In its new report Tech Nation 2017, the organisation notes that digital technology in the UK has attracted £28bn of VC and PE investment in the past five years, with its nearest rival France bringing in just £11.4bn in that time.
This is all the more remarkable, given that digital tech investment last year was 34% down on 2015 – a year of record inflows.
According to the report, the subsequent dip was part of a broader, global correction that may have reflected a mood of increased caution among investors – particularly in light of heightened economic and political uncertainty that swept across Europe and the US.
However, London remains a major centre for investment, attracting £2.2bn last year – around £1bn more than either of its two closest competitors, Amsterdam and Paris.
Indeed, over the past five years London has benefited from more investment than Paris, Berlin and Amsterdam combined.
Tech City UK received more than 2,700 submissions for the report from senior figures in Britain’s tech sector – more than half of which were from chief executives.
In their introduction, the accelerator’s chair Eileen Burbidge and CEO Gerard Grech write: “Tech Nation 2017 gives the clearest indication yet that the UK possesses unrivalled digital tech specialisms. The digital economy is growing twice as fast as the wider economy, with an economic output of close to £100bn per year.
“That being said, it is critical that we future proof what we have achieved so far. The recently announced digital strategy from the UK government is already setting us on the right path.”
They add: “Tech is at a critical juncture and, as we head into the future, we must reassure founders, investors, international talent and our home-grown digital workforce that the UK is, and will remain, the best place to start and scale world-class digital businesses.”
In a foreword, UK premier Theresa May writes: “Britain already leads the world when it comes to new technology. We make more contactless payments than anywhere else and we help to lead the way in everything from fintech to artificial intelligence [AI]. We are natural innovators, eager to incorporate the latest innovations into our lives.
“As prime minister, I am determined that we will build on this success, as we seize the opportunities that arise from leaving the EU and seek to build a bold new future for our country. That is why support for the digital tech sector is an important element of the government’s modern industrial strategy.”
Mrs May adds: “Through close cooperation between government and our tech industry we will help to ensure that Britain remains one of the most competitive places in the world to start and grow a tech business.
“We will expand the scope of our digital tech industries, funding AI, robotics, 5G, smart energy and more. We will broaden their reach across the UK, create new institutes of technology, and reinvigorate STEM and digital education to equip young people for the workplaces of the future.”
Find further details on the report and a download link here.