Speaking at the opening of London Tech Week last Monday, the UK Prime Minister Rishi Sunak argued that “the tectonic plates of technology are shifting”. His metaphor made reference to the innovation we’re witnessing across the EU that is being spearheaded by the proliferation of technologies like AI. It also nods to the fact that the center of gravity on tech might be shifting away from Silicon Valley and the big Chinese companies to a more equitable balance of power where the UK and other European countries could play an increasingly significant role in shaping our global future.
This shift would represent an evolution rather than a revolution. The UK in particular has, famously, been a tech hub for many years and successfully created the environment required for tech businesses to thrive. In doing so, it has championed talented founders and effectively supercharged innovation. From pro-investment tax frameworks like SEIS (that allows investors to claim tax relief on 50% of the value of very early stage investments), to significant R&D capital budgets in areas like quantum computing, there’s a reason why there are more tech unicorns in the UK than in Germany and France combined.
And despite recent criticism from industry figures that perceived overregulation has made the UK less attractive, the numbers tell a different story. Over the last decade, London has been the number one destination for global tech investment ahead of rivals in Europe and even San Francisco. According to London & Partners, more than 1,700 London-based investment projects have secured inward foreign investment since 2014, further evidence of global investors recognising the UK as a hotbed of disruptive ideas.
But – as we know – it’s not all been plain sailing of late. Momentum in UK tech has been maintained at more or less an even keel despite significant disruption to the global ecosystem over the last 18 months, but hasn’t seen the kind of growth rates we came to expect over the last decade. There are undeniable liquidity challenges for high growth companies at the moment and restrictions on capital are evident across the fundraising landscape. That’s why leading VC firm Atomico projects that the amount of venture capital invested in European startups this year will be 52% lower than in 2021.
On top of this, there have been further disruptions including the collapse of Silicon Valley Bank and the associated threat to Silicon Valley Bank UK. The collapse – both a symptom of and a contributor to the global tech malaise – seriously threatened the industry’s infrastructure. Thankfully, the sector exhibited the resilience which has come to define it, and is now on firmer ground for any challenges which may lie ahead.
As a result of the pragmatism the sector has demonstrated to navigate these obstacles, I agree with the consensus at London Tech Week that now is the time to double down on this bustling ecosystem. In particular, I strongly agree with HSBC Innovation Bank CEO, Erin Platts, who made clear that “embracing the UK’s innovators and investors, and enabling their bold ideas is more important than ever to our long-term economic prosperity.”
At Seedrs, we’re focused on playing our part in enabling founders to bring bold ideas to the fore everyday. And, in particular, we’re seeing green shoots of renewed positivity for tech on our platform. Firstly, tapping into the artificial intelligence theme of last week, there have been several successful AI-focused campaigns raising on Seedrs this year. These include LogicDialog, a platform making it easy for businesses to build powerful generative conversational AI solutions who we helped raise £613k from 580 investors; and Verv Energy, whose Smart Isolator product that reduces the energy, carbon and running costs of air conditioning, drove 335 investors to invest £436k.
In other sectors where tech is an enabler, there has been more good news. Despite being the quickest growing sector on the platform last year, ClimateTech grew even faster in the first half of this year. Raises are up 225% (4-13) with total investment up from £3.2m in 2022 to £16.2m in 2023. At the same time, the total number of investors in clean energy campaigns this year is up 230% from 1428 to 4720.
If, as I believe, the UK tech industry can navigate this temporary storm and find calmer waters then there’s plenty to be excited about. With world-leading universities and one of the most digitally literate societies in the world, the UK is acting from a position of strength. From AI to cyber and life sciences, UK tech is paving the way across several verticals and is set to play a pivotal role in the next decade of economic growth. It’s perhaps no wonder that Andreessen Horowitz (one of the world’s most prolific VCs) announced last week that it has chosen to build its first office outside of the U.S. in London. I think they recognise what we in the UK tech scene have known for some time now.
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