New Chancellor Rachel Reeves received more good news on Thursday, in addition to the recent GDP figures. The UK has maintained its top spot as the number one destination in Europe for venture capital investment in the tech sector.
According to data published by Dealroom, a global provider of data and intelligence on start-ups and tech ecosystems, UK start-ups and scale-ups raised £7.4bn in the first half of 2024. This marked a 16% increase from the same period last year and accounted for nearly one-third of all venture capital funding in Europe during that time.
The UK tech sector outperformed its counterparts in Germany and France combined, and raised over five times more than Switzerland. This was largely due to significant funding rounds by individual companies, with Wayve, an autonomous vehicles technology firm, leading the way by raising £861m in May. The company even welcomed former Prime Minister Rishi Sunak to its headquarters on the day the funding was announced.
Other notable fundraisings included credit technology company Abound’s £400m raise and Highview Power’s £300m raise to invest in the UK’s first commercial-scale liquid air energy storage plant.
The second half of the year is expected to be just as strong, as Index Ventures, a global venture capital firm known for backing several UK unicorns (start-ups with a valuation of $1bn or more), recently announced a $2.3bn fund to invest in start-ups, with a portion likely to be allocated to the UK.
Dealroom’s data also revealed that the energy sector attracted the most funding during the first half of the year, with £4.3bn raised across Europe. Companies focused on generative AI also saw significant investments, with £2bn raised.
London maintained its position as Europe’s leading centre for tech investment, with start-ups in the UK capital raising £5.3bn during the period. Paris came in second with £2.4bn, followed by Stockholm with £940m. Cambridge, home to chip designer Arm Holdings, also made the top 10 list, raising £517m, an 83% increase from the same period in 2023.
Jeannette zu Furstenberg, Managing Director and Head of Europe at General Catalyst, a global VC firm, praised the figures, calling them “very encouraging” and highlighting the potential for Europe to play a major role in the economic opportunities presented by AI.
The increase in late-stage funding during the first half of the year demonstrates the demand for Europe’s most ambitious companies. The figures also indicate that the UK has become the world’s third-largest venture capital market, surpassing India and trailing only the United States and China.
The news comes on the heels of former Prime Minister Rishi Sunak’s departure from office, a vocal supporter of the UK tech sector. However, the sector has faced challenges under his government, particularly with restrictions on visas for skilled migrants. As the sector eagerly awaits Labour’s plans, it hopes for a more supportive approach to attract overseas talent and maintain its lead over European competitors.
