Technology investors have ploughed a record £20bn into British start-ups this year, putting funding on track to double in just three years.
Figures from Beauhurst, which tracks start-up deals, found that UK firms had crossed the £20bn mark for the first time after a record third quarter. It comes after a spate of huge funding deals for companies such as Revolut, Checkout.com and Hopin.
Tech start-ups have already raised 32pc more than they did in the whole of 2020 and are on track to double the £11.7bn total from 2018.
Despite warnings that Brexit would hit investment in UK start-ups, venture capital funding has continued to break records and easily outpaces much of Europe.
A string of new “decacorns” – companies valued at more than $10bn (£7.3bn) – have been minted this year.
“The world is waking up to bigger things happening in the UK and Europe. Historically we’ve had far less capital than in the US but you’re seeing these really big companies getting created here,” said Rob Kniaz, a partner at venture capital firm Hoxton Ventures.
“When you have a Revolut worth $35bn, those numbers are getting big enough where people are saying: ‘OK I do believe you can create a big company here now.’ People are seeing these are real companies and real numbers, and you can’t argue with that.”
Funding for start-ups has increased despite more start-ups turning to the public markets, either through a traditional listing on the London Stock Exchange or a so-called “Spac” deal that has become popular in the US.
Beauhurst’s data showed that total fundraising had hit a record this year despite the number of deals not yet surpassing previous years, indicating that companies are securing ever-bigger cheques from investors.
“Everyone is moving at twice their normal cadence,” Mr Kniaz said. “Things that five or 10 years ago that would be outside our core remit are now entering the tech VC space, because you’re seeing these massive global companies that are becoming winner takes all, and increasingly those are coming from the UK and Europe.
Virtual events company Hopin has raised the most so far this year, receiving £610.7m from investors including Silicon Valley investors Andreessen Horowitz. Finance app Revolut has raised £578m while robot surgery firm CMR Surgical secured £432m earlier this year.
Financial technology companies have been among the most successful fundraisers this year, taking in £5.3bn – more than a quarter of the total raised by British start-ups.
Artificial intelligence firms have raised £2.3bn, followed by challenger banks, security and cryptocurrency companies.
Beauhurst found that start-ups in London had accounted for more than half of the money raised this year. Those based in the capital have raised £12.6bn, followed by the South East and East of England.
The third quarter of the year was the biggest to date, with £6.8bn raised, up from £3.6bn in the same period a year ago, when investors were still recovering from the initial shock of Covid. However, the total number of deals in the last three months was down, from 1,424 in the same period last year to 1,246.
Figures from Tech Nation, the publicly-funded industry group, showed that investment in UK start-ups was higher than Germany and France combined in the first half of the year, with Britain now seen as a clear third after China and the US.
It now has more than 100 companies with so-called “unicorn” status, applied to those worth more than $1bn.
The record fundraising comes despite more tech companies choosing to list on the public markets. Deliveroo, Darktrace and Wise have all floated on the London Stock Exchange this year, while electric vehicle maker Arrival, used car website Cazoo and virtual doctor app Babylon are all going public in the US.