Manchester shares in success of UK tech firms attracting billions in venture capital

Immersive technology

The UK’s tech sector is outperforming all the others in Europe – even those in the US and China – in terms of the increase in venture capital investment it saw in 2019.

And new Government research demonstrates that the UK’s success is spreading across the country, with Manchester one of the 26 top destinations in the world for venture capital investment.

The city is ranked 25th in world locations for venture capital investment, and fifth highest placed in UK standings.

Latest figures show that investments in the UK tech sector soared to £10.1bn in 2019 – a £3.1bn increase on 2018’s very strong figures and the highest level in UK history.

Between January and December UK companies secured a third of the £30.4bn raised during the year in Europe. In particular, UK-based tech firms received more VC investment than Germany (£5.4bn) and France (£3.4bn) combined.

The number of rapidly-growing UK tech companies soared as venture capital investment increased by 44%.

Growth in VC investment exceeded 40% for the third year in a row. To put this growth into perspective, investments in France grew by a little over a third compared with 2018, while Israel’s investments rose by a fifth.

On a global scale, the UK’s performance in 2019 means it now sits behind only the US and China in terms of total venture capital funding received in 2019 and on a city-level London joins the Bay Area, Beijing and New York at the top of the world’s most-funded locations.

Companies headquartered in London raised £7.4bn during 2019.

Almost half of the UK investments (£4.6bn) in 2019 came via US and Asian investors and the UK tech sector recently overtook the US for foreign investment per capita.

What’s more, when compared with Germany and France, the UK had the widest overall mix of foreign, versus domestic, investors.

While eight more billion-dollar companies, or unicorns, were created in the UK in 2019 – taking the total number based in the UK to 77 compared with 34 in Germany and 20 in Israel – the amount being invested in early-stage companies increased, reaching £3.9bn in 2019, up from £3bn the year before.

Since 2014, the UK has produced more than twice the total number of $1bn tech companies (unicorns) than any other country in Europe, and sits behind only the US and China when it comes to building fast-growing global firms.

While London remains the leading city for unicorns in the UK, having produced a total of 46 unicorns since 1990, Manchester, Oxford, Cambridge, Edinburgh and Bristol have produced a combined total of 20.

Manchester has produced as many unicorns as Amsterdam.

The UK’s success in attracting venture capital investment in 2019 also fuelled, in part, a surge in the UK’s best performing sectors – fintech, AI and deep tech, and clean energy.

Again, when compared with Germany and France, UK fintech firms raised £4.1bn last year – an impressive 7.5 times the amount raised by French fintechs, and three times as much as fintech firms in Germany.

This figure represents a 100% increase from 2018’s total of £2bn.

Digital Secretary, Nicky Morgan, said: “These brilliant new numbers demonstrate the strength of the UK tech industry and how it is a sweet spot of our economy.

“Our tech companies are not only commanding the confidence of global investors, but they are also creating new jobs and wealth across the country.

“It’s absolutely vital we maintain this impressive success and in Government we are working tirelessly to make sure the conditions are right.”

Gerard Grech, chief executive of Tech Nation, which supports UK tech entrepreneurs, said: “In 2019 the UK secured a formidable 33% of all European tech investment, at £10.1bn, despite accounting for roughly nine per cent of Europe’s population.

“Equally exciting is the rapid expansion of digital tech growth across the UK regions, which augurs well for national GDP growth and a truly-connected Britain.

“At Tech Nation, we are also working on an international vision. UK tech businesses are now well poised to forge new international partnerships and global ventures, enhancing tech growth across borders.”