The GDP figures weren’t the only encouraging news that crossed the desk of Rachel Reeves, the new chancellor, on Thursday.
There was also news that the UK retained its crown as the number one destination in Europe for venture capital investment in the technology sector.
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Data published by Dealroom, a global provider of data and intelligence on start-ups and technology ecosystems, revealed that UK start-ups and scale-ups raised £7.4 billion during the first six months of the year.
This amount represented a 16% increase over the same period last year and represented almost a third of all venture capital funding in Europe during the six months.
UK tech companies raised more than their peers in France and Germany combined and more than five times their peers in Switzerland.
This has been helped by a series of large funding rounds completed by individual companies, led by Wayve, the autonomous vehicle technology company. This raised £861m from investors in May welcome Rishi Sunakthe former Prime Minister, to his headquarters on the day the fundraiser was announced.
That month also saw credit technology company Abound raise £400m, while Highview Power, the long-duration energy storage company whose backers include the UK Infrastructure Bank and Centrica, raised £300m last month – a most of which will be invested in what it hopes will be the UK’s first commercial-scale liquid air energy storage plant.
Other big fundraisings by UK tech companies during the first half of the year included those from online bank Monzo, which raised £150m in May, and electric vehicle charging group Char.gy, which in the month last year raised 100 million pounds.
More to come
The second half of the year looks equally strong.
Dealroom’s numbers come a day after Index Ventures, a global venture capital firm known for backing the UK’s largest number of unicorns (startups that have achieved a valuation of $1 billion or more), announced that it has raised $ 2.3 billion in two new funds to invest in start-ups – a portion of which is expected to be implemented in the UK.
Figures from Dealroom suggest that specialist energy technology companies attracted the majority of funding during the first six months of the year, attracting around £4.3 billion across Europe, with companies active in the generative AI space attracting around £2 billion in cash.
London is Europe’s technology hub
The numbers also reveal that London maintained its position as the main European technology investment center during the first half of 2024.
Start-ups and scale-ups based in the UK capital attracted around £5.3 billion in funding during the period – more than double that of second-placed Paris, whose start-ups attracted 2,400 millions of pounds in funding and more than five times that. as much as third-placed Stockholm, whose start-ups raised £940m.
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Cambridge, home of famous chip designer Arm Holdings, was also among Europe’s top 10 investment destinations, with its companies attracting around £517 million, an 83% increase on the same period in 2023. Companies based in Cambridge that raised money during the period included Luminance, the legal-focused generative AI business, which raised £321 million in May.
Jeannette zu Furstenberg, managing director and head of Europe at global venture capital firm General Catalyst, said: “These numbers are very encouraging and demonstrate how Europe can be a key player in the immense economic opportunity triggered by AI, which I like to call it European RenAIssance.
“We believe that harnessing the power of AI to bolster European productivity and growth will be key to building globally successful technology companies on this continent.
“We believe the increase in late-stage funding in the first half of this year demonstrates the appetite for Europe’s most ambitious companies.”
Hopes for the future
The numbers will raise hopes for venture capital funding, which has fallen sharply from mid-2022 as interest rate increases across the world began to take effect.
Separately, the British Business Bank – the UK’s state-backed economic development agency, has published figures that suggest the UK has overtaken India to become the world’s third largest venture capital market, behind only the United States and from China.
The figures come just a week after Sunak, who was seen as an enthusiastic supporter of UK technology, was removed from office by voters.
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However, despite Sunak’s vocal support for UK technology, the sector has often been disappointed by government restrictions on visas – making it harder to attract foreign talent.
The sector is therefore interested in hearing what the Labor Party has to offer.
The party manifesto had little to say about investing in tech start-ups and the tech sector has changed beyond recognition since the last Labor government left office in 2010.
But it is hoped that a more favorable approach to skilled migrants could further cement the lead of UK tech start-ups over their continental European peers – particularly in areas such as helping to commercialize intellectual property and research from universities in the country.
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