We are pleased to present our UK funding ecosystem map and report. After Israel and Spain, this is our third map of the series.
The UK funding ecosystem continued its strong development, by reinforcing its position as the primary hub for European tech startups. It ranked 4th in Global Innovation Index 2020 and fundraised the most VC capital in Europe with $16B (including Ireland).
Below, you will find the UK´s major funding ecosystem participants in a practical map, categorised by type and investment stage.
Additionally, Cardumen Capital´s research and analysis team has worked with a variety of sources to show the evolution of the UK’s startup environment. Our team extracted the information from Pitchbook, CB Insights TechNation, 2020 Annual European Venture Report, Global Innovation Index, In Diverse Company, The Deal Equity investment in the UK in 2020 and CoFounder.
You can get a high-resolution copy of the landscape by clicking here.
Here are the top highlights of our funding landscape and analysis:
Investments in the UK
UK VCs raised $14B between the years 2019-2020, representing almost half of the total amount raised by European VCs ($29B). $855M was raised amongst 9 funds in Q1 2021 in both the UK and Ireland.
Despite challenging market conditions, Covid-19 and the UK’s Brexit, investments in UK start-ups remained steady with a total of $15.5B in 2020 compared to $14.8B in 2019.
The influence of the uncertainty in 2020 was reflected in Q1 and Q2, picking up in Q3, and closing with a quarterly record number of $4.71B in Q4.
2021 started with $6.35B[1] invested over 503 deals.
[1] The data applies to the UK and Ireland.
International investors have increased their participation over the last 5 years. 63% of investment into UK tech came from foreign investors in 2020, up from 50% in 2016.
Most of the foreign investments in 2020 came from the US and Canada (38%), followed by Europe (12%), Asia (8%), and others (4%).
Of the 190 UK VCs and CVCs we analysed, 48% of funds are focused on seed and early-stage venture (series A and series B).
Investment in seed stage as a proportion of overall VC investment is on a downward trend with an 8% decrease over the last 5 years.
According to Pitchbook, Q1 2021 exit value reached a peak of €10.9B. €600M more than the annual record of the past decade (€10.3B in 2018). Deliveroo’s IPO last March was the main reason for this exceptional value.
UK Tech per sector
Deep tech (technology that requires a lengthy R&D process due to substantial scientific or engineering challenges) investments in the UKhave increased by 17% to $4B in 2020. The UK is third globally in the field, though its total volume invested is only equal to a tenth of the US.
UK Fintech investments are second in the world at $4.5B in 2020, despite a $1.5B drop from 2019.
According to CB Insights, there were 5 new unicorns in the UK since Jan 2021, all of them are in the fintech space.
Impact Tech (technology addressing major social and environment problems) investments increased by 160% to $2.6B from 2019 to 2020, while in the US, Impact Tech investments increased by 15% to $11.4B in the same time frame. The UK is third in the world for investments concerning impact tech
Gender and diversity
Female angel investors make up 13% of active UK angels according to a McKinsey & Co survey. We identified a total of 60 active angels. 14 of them are women, representing 23%. Though the Angel gender diversity is better in comparison to Israel and Spain, where women represent less than 10% of angels, it is still particularly low in comparison to the 30% female angel inclusion in the US.
22% Tech directors are women (June 2018). The proportion of women on Tech company boards has remained constant since the year 2000.
4% of the UK tech workplace is composed of individuals identifying as Black, Asian, and/or other minority ethnic groups. Population fromBAME backgrounds represent 14% of the total population of UK.
About Cardumen Capital
Cardumen Capital is an independent European Alternative Investment Management Company. Its technology fund focuses on deep tech early stage startups in Israel. Get in touch with us here.
About Gonzalo Martínez de Azagra
Gonzalo has 17 years of experience in technology and venture capital. He is Co-Founder and General Partner of Cardumen Capital working out of the Tel Aviv Office.
About Noa Shamay
Noa has a bachelor’s degree in Economics and Data Analysis from IDC Herzliya. She is an analyst at Cardumen Capital working out of the Tel Aviv Office.
About Sunny Pool-Jones
Sunny is an Economics Undergraduate at the University of Exeter. He is currently interning at Cardumen Capital.