UK is Europe’s leading destination for venture capital investment in the technology sector | Business news

British tech companies have raised more funding than their competitors in France and Germany combined.

The GDP data was not the only encouraging piece of news to land on the desk of Rachel Reeves, the new Chancellor of the Exchequer, on Thursday.

There was also news that the UK has maintained its leading position on the list of destinations Europe for venture capital investments in the technology sector.

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Figures published by Dealroom, a global provider of data and information on start-ups and technology ecosystems, revealed that UK start-ups and scale-ups raised £7.4bn in the first six months of the year.

This was 16% more than during the same period last year and represented almost a third of all venture capital funding in Europe in the six months.

British technology companies have raised more money than their competitors in France and Germany combined, and more than five times more than their competitors in Switzerland.

This was helped by several large funding rounds by individual companies, led by Wayve, a company focused on autonomous vehicle technology. raised £861m from investors in May and welcome Rishi Sunakformer Prime Minister, to his headquarters on the day the fundraiser was announced.

In the same month, credit technology company Abound raised £400m, while long-term energy storage company Highview Power, whose investors include UK Infrastructure Bank and Centrica, raised £300m last month, with the majority of that to be invested in what it hopes will be the UK’s first commercial-scale liquid air energy storage facility.

Other major fundraising by UK tech companies in the first half of the year included that by online bank Monzo, which raised £150m in May, and electric vehicle charging group Char.gy, which raised £100m last month.

More in the future

The second half of the year promises to be equally good.

Dealroom’s figures come a day after Index Ventures, the global venture capital firm known for backing the largest number of UK “unicorns” (startups valued at $1bn or more), announced it had raised $2.3bn in two new funds to invest in start-ups, some of which is to be invested in the UK.

Dealroom data shows that in the first half of the year, energy technology companies attracted the lion’s share of funding – around £4.3bn across Europe, while generative AI companies raised around £2bn.

London is the European technology hub

These numbers also show that London maintained its position as a leading European technology investment hub in the first half of 2024.

Startups and scaleups based in the UK capital raised around £5.3bn in funding during the period – more than twice as much as second-placed Paris, whose start-ups raised £2.4bn, and more than five times as much as third-placed Stockholm, whose start-ups raised £940m.

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Cambridge, home to renowned chip designer Arm Holdings, was also in the top ten European investment destinations, with its companies attracting around £517m, an 83% increase compared to the same period in 2023. Cambridge-based companies that raised money during the period included: Luminance, a law-focused generative AI a company that raised £321m in May.

Jeannette zu Furstenberg, Managing Director and Head of Europe at global VC firm General Catalyst, said: “These numbers are very encouraging and show that Europe can play a key role in realizing the enormous economic opportunities that AI creates, which I like to call the European RenAIssance.

“We believe that harnessing the potential of AI to boost productivity and economic growth in Europe will be key to building globally successful technology companies on the continent.

“The growth in late-stage funding in the first half of this year, we believe, shows the appetite of the most ambitious companies in Europe.”

Hopes for the future

The data will boost hopes for venture capital funding, which has fallen sharply since mid-2022 as interest rate hikes hit globally.

Meanwhile, the British Business Bank, the UK’s state-backed economic development agency, released data suggesting the UK had overtaken India to become the world’s third-largest venture capital market, behind only the US and China.

The figures were released just a week after Mr Sunak, seen as an enthusiastic supporter of the UK’s technology sector, was ousted from power by voters.

But despite Mr Sunak’s clear support for the UK’s technology sector, it has often faced disappointment over his government’s visa restrictions, which have made it difficult to attract foreign talent.

The sector is therefore interested in what the Labour Party has to offer.

The party manifesto made little mention of investing in tech start-ups, and the tech sector has changed beyond recognition since the previous Labour government ended in 2010.

However, there is hope that a more supportive approach to skilled migrants could further cement the leading role of UK tech start-ups over their continental European counterparts, particularly in areas such as helping commercialise intellectual property and research conducted at UK universities.