Tech Nation Report: the state of UK tech in 7 charts

VC investment into UK tech reached $15bn last year, the third highest total globally – behind the US ($144.3bn) and China ($44.5bn) – according to the latest Tech Nation Report.

The annual report explores trends in UK tech activity and investment, revealing its growth areas and where the country ranks globally. Although there is a wide gap between the UK and the largest global tech markets, it is by far the busiest market in Europe, drawing in capital from around the world.

Investment grew last year despite the pandemic, and climate tech in particular saw a considerable boost near the end of the year.

The report’s key findings include:

1. UK VC investment in tech companies continued to grow in 2020, reaching $15bn – a significant rise from $5.6bn in 2015. The US and China continue to lead in the sector, but the US has pulled further ahead while China’s investment fell for the second year in a row from a high of $92bn in 2018.
2. London is the fourth largest market globally for tech investment, but the top 20 is dominated by US cities. Berlin fell from eighth to 16^th place, Paris dropped two places to 15^th while Shanghai has nearly closed its gap with London.
3. The UK startup and scaleup ecosystem, valued at $585bn, has more than doubled since 2017 and is by far the largest in Europe.
4. Fintech dominates UK tech investment, drawing in $4.5bn of capital last year – nearly twice as much as healthtech and enterprise software, the second and third most popular subsectors. Proptech lags near the bottom with just $0.6bn of investment in 2020, although it was the first time since 2017 that investment into the subsector rose.
5. International capital makes up the majority of investment into UK tech. Some 63% of investment into the sector came from overseas in 2020, compared to 50% in 2016.
6. Deep tech investment has risen more in the UK – 17.4% in one year – than in any other country or region covered in the report. However, investment into deep tech companies – ones that develop technologies such as AI, quantum, fusion and blockchain – totalled just $3.9bn in 2020, nearly 10 times less than in the US ($36.7bn). The report notes that the UK is falling behind other global players in its R&D expenditure, which totalled less than £30bn in 2018, compared to the £33bn spent by just two companies in the US – Amazon and Alphabet.
7. UK climate tech investment reached a new high in 2020, attracting nearly $800m of capital – 21% more than in 2019. This happened despite a Covid-driven slump in the second and third quarters of the year.

Gerard Grech, CEO of Tech Nation, said: “The UK’s tech success is the result of foresight, drive and dynamism. The strong and growing tech ecosystem we have nurtured over the years is delivering stellar results. I believe that this is just the beginning of what the UK can achieve.”

You can read the full 2021 Tech Nation Report here.