UK tech sector grows at faster rate than US and China – with London now a rival for Silicon Valley

Investment in the UK’s tech sector grew at a faster rate than the US and China last year – with London joining San Francisco, Beijing and New York as the world’s most-funded cities.

The research, prepared by Dealroom and Tech Nation for the British government’s Digital Economy Council, revealed that investment in UK tech surged 44% to £10.1billion in 2019, outperforming Europe and more than France and Germany combined.

The US and China came out on top in terms of total investment value – attracting $116 billion and $33.5 billion respectively – but those figures were down 20% and 65% on last year.

The figures reflect the increase in US-based investors chasing cheaper valuations as well as growing interest in areas like fintech, with London overtaking New York for fintech deals. Start-ups like challenger bank Monzo and online payments firm Klarna both attracted nine-figure deals last year, led by US investors.

Emerging industries included AI, “deep tech” and clean energy. Health firm Benevolent AI raised $90m, virtual reality company Melody raised $60, and energy firm Ovo raised $260m.

Digital Minister Matt Warman said: “It’s fantastic to see Britain continues to be the best place in Europe to start and grow a tech business, with record-breaking investment and the creation of eight new billion-dollar companies last year.

“On access to talent, we will have a different immigration policy over the coming years and that will be an important opportunity for us to show that Britain is still very much the right place to start or grow a tech business.”

The UK now has 77 unicorns – start-ups with a value of $1bn – twice the total in Germany. Eight British companies – Rapyd, CMR Surgical, Babylon Health, Sumup, Trainline (TRNT.L), Acuris, Checkout.com and OVO Energy – reached the status in 2019.

Paul Murphy, partner at Northzone VC firm, told the FT: “Really, for the first time, there has been significant inbound interest from the US and Asia. Silicon Valley is still the epicentre of our industry but it has lost its monopoly.”