2017 record year for VC funding into UK & London start-ups – doubling 2016 records

2017 was a record year for UK tech investment, with British businesses attracting almost double the amount of funding they received in 2016 – according to new research by London & Partners.

The findings revealed that the UK remains Europe’s leading country for global tech investors, with British tech firms attracting more venture capital (VC) funding than any other European country in 2017.

UK scale-ups attracted an all time high of £2.99bn last year – almost double the 2016 total of £1.63bn.

Some of the biggest deals into the UK tech scene in 2017 included: Improbable (£391m); Deliveroo (£364m); TransferWise (£211m) and Funding Circle (£81m)

While 2017 saw more total funding, the number of deals made actually declined from previous years.

2017 saw a total of 745 deals while 2016 recorded 904 deals – with 990 made in 2015.

Fintech was the leading sector for VC investment into UK tech companies in 2017, with UK fintech firms bagging a record £1.34bn – significantly more than 2016 (£495m) and the previous record set in 2015 (£748m).

While artificial intelligence, virtual reality and cyber security were other sectors that experienced increased growth and financial attention.

Read more: How does venture funding work?

London’s tech sector continues to fuel the growth of the UK’s digital economy, with the capital’s tech firms raising a record £2.45bn and accounting for around 80% of all UK VC tech funding in 2017 – with Improbable, Deliveroo and Truphone (£255m) all raising some serious funding rounds last year.

Fintech is the leading sector for VC funding into London tech businesses with London fintech firms attracting a record £1.27bn this year. In fact, investment into London fintech companies accounts for 94% of all funding into UK fintech.

Compared to other European countries and major cities, the UK and London remain the favourite destination for tech investors.

UK firms attracted almost four times more funding in 2017 than Germany (£694m) and more than France, Ireland and Sweden combined.

While London tech companies also raised significantly more VC investment than any other European city, including Amsterdam, Berlin and Paris.

Despite fears the UK’s decision to leave the European Union would badly damage investor appetite in UK start-ups, UK tech firms have continued to attract high levels of investment since the EU referendum vote – raising over £4bn of VC funding since 23 June 2016.

With London tech firms raising a total of £3.2bn since the Brexit vote.

Venture capital funding into London and UK tech companies from 2012-2017

Source: PitchBook December 2017

Venture capital funding into technology firms in major European cities in 2017

Source: PitchBook December 2017

Venture capital funding into technology firms in major European countries in 2017

Source: PitchBook December 2017

Sadiq Khan, mayor of London, said:

“Today’s record investment figures are further proof that London is the undisputed tech capital of Europe and I am committed to ensuring we take over from Silicon Valley as the world’s leading tech hub.

“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.”

Eileen Burbidge, partner at Passion Capital, said:

“The UK remains one of the world’s leading hubs for technology investors and it is no surprise to see that UK tech companies attracted double the amount of venture capital financing than any other European country last year.”

“It’s a testament to our exceptional entrepreneurs that the UK tech sector continues to produce companies that are leading in the development of cutting edge technologies such as artificial intelligence and fintech.

“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.”