Despite Brexit having sent us on an economic rollercoaster, VCs haven’t been discouraged from investing in UK startups. In fact, their appetite for betting on British businesses became even bigger last year, according to a new report from Sonovate, a provider of finance to the contract recruitment industry.
Having measured activity across private equity and venture capital deals, Sonovate has revealed that over £6.7bn was invested in British tech firms in 2016. In the first six months, a record 2,546 deals took place and while investments slowed down after the referendum, a total of 4,009 deals were still completed in 2016. That’s an increase of 40% compared to 2015.
Offering a snapshot of the tech sector by looking at the 50 biggest tech deals of the year, the QuickView report showed that the bulk of investments were given to London-based tech startups, with 68% being located in the British capital. MetroBank, the high-street banking startup, was at the top of the list, having enjoyed a total of £447.2m funding. Hot on the heels in position two was Deliveroo, the food delivery startup, which received an additional £218m investment last year. AvantCredit, lending platform, came third by raising £127.8m.
Fintech remained the most popular sector to invest in, with 24% of the 50 biggest deals going to startups in the sector. Healthtech companies enjoyed 20% of the funding, making it the second biggest group in terms of investment. After that it was quite a drop, with cloud technology startups only representing 8% of the top 50 deals. Startups in the ecommerce and telecommunications sectors each represented 6% of the list while hardware, marketplace, mobile, on-demand and energy startups each represented 4% of investments.
But despite hogging attention in the media, startups developing AI, automotive, big data, cybersecurity, banking, logistics and sensor and software technology each only represented 2% of the 50 biggest deals.
Even though Brexit will certainly keep the markets in a state of flux for the foreseeable future, it’s encouraging to see that the trust VCs have in British tech startups hasn’t faltered.