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UK tech sector buoyant with record investment in 2017


Last year saw a record amount of money invested in the UK tech sector, a new report has revealed. According to research carried out by the Mayor of London agency, London and Partners, tech firms across the country attracted almost £3 billion in venture capital in the 12 month period ending December 2017.

This represents a massive increase from the £1.63 billion that the sector attracted throughout 2016. London accounted for 80% of the overall total, with £2.4 billion invested in the capital’s tech firms, compared with £1.23 billion the previous year.

In fact, London tech firms received more venture capital funding in 2017 than all the other major European countries combined, with Paris its closest rival receiving £565 million. Nationally, the £2.99 billion that flooded into the UK tech sector also dwarfed the next highest country, Germany which received £645 million.

Mayor of London Sadiq Khan called the figures “further proof that London is the undisputed tech capital of Europe” and reaffirmed his commitment to making London the world’s leading tech hub. He said: “Technology entrepreneurs and businesses are attracted to our great city for its diverse talent pool and unique business ecosystem, and I am determined that London remains open to investment and the best tech talent from all over the world.”

Testament to our exceptional entrepreneurs

The report shows that the sector to receive the largest amount of funding was fintech, attracting £1.34 billion across the UK. Artificial Intelligence (AI) also saw record levels of investment, bringing in £488 million nationwide.

This represents an increase of more than double the £232 million raised the previous year. Eileen Burbidge, a partner at investment company Passion Capital, called the figures “no surprise” and said it was a “testament to our exceptional entrepreneurs”.

She added: “This environment and ecosystem of innovation presents tremendous opportunities for investors, and will help to attract global investment into the UK’s digital economy for many years to come.”  London and Partners also highlighted in the report that major investments from tech giants such as Amazon, Apple and Google during 2017 are proof of their long-term commitment to the UK.

Underpinning the UK’s attractiveness for investors in the tech sector is the country’s innovation, infrastructure and considerable talent pool. Government investment specific to the industry, and more broadly in science and innovation, has helped to create the conditions to attract outward investment.

Record sums of investment

In 2016’s Autumn Statement, the Government announced an extra £2 billion a year for Research and Development. In March 2016, Universities and Science Minister Jo Johnson announced that there would be a record £26.3 billion budget for science to cover a five year period to 2021.

At the time the minister also pledged that the Government would continue to invest in scientific infrastructure on a record scale. It has committed around £5.8 billion of capital up until 2021, with a number of major projects in the pipeline.

Such huge numbers have had a major impact on attracting investment, as well as drawing the top tech talent to these shores. Last November, Prime Minister Theresa May announced an extension to the visa scheme designed to attract top overseas technology talent.

The number of Tier 1 Exceptional Talent Visas available to overseas workers in high demand areas including the tech sector has been doubled to 2,000. Meanwhile Mrs May has also pledged to invest £170 million in new "prestigious" institutes of technology.

Helping technology start-ups

These include plans to set up specialist maths schools, expanding on the Exeter and King's College London Mathematics Schools. Churning out home grown tech specialists, as well as attracting the very finest from abroad, has certainly enhanced the UK’s attractiveness to investors.

Another space in the technology sector where the Government has been pro-active is encouraging start-ups. Tech City UK is a government-backed group set-up to support start-up technology companies.

During last November’s Autumn Statement it was given an extra £21 million of funding to help with its various programmes, aimed at starting and scaling up digital tech companies and accelerating their growth. Tech City currently has start-up clusters in 30 locations around the UK, sharing data, knowledge and insight on the sector, and helping to establish companies that are in turn attracting investment from venture capitalists.

Whatever the reasons behind the UK’s considerable success in the tech industry, the London and Partners report is evidence of investor confidence. For now, the UK is the number one place in Europe to do business in the sector.

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