By Steven Sandford, Director at Davis Grant
In the first three months of 2021, the UK tech sector has managed to achieve a record investment of around $8 billion as investors seek new opportunities in this fast-growing sector.
It is undeniable that the pandemic has given a significant boost to UK tech, with businesses seeking out new, innovative solutions to deal with the restrictions and challenges that they have faced.
The UK tech sector has been at the heart of many key developments that have helped businesses survive and grow, which is why the nation has seen considerable investment already this year.
Investments in the first quarter of 2021 included funding for fast-growing companies such as Touchlight Genetics, Starling Bank and insurance provider Zego, which amounted to more than twice the cash raised by tech firms in the same quarter last year.
Tech Nation, the Government-backed entrepreneur network, has analysed the latest data and found that five companies have also raced to a valuation of more than $1 billion so far in 2021, which is nearly as many as in the entirety of 2020.
Funding in the first quarter of this year follows on from record-breaking fundraising activity in 2020, which saw investment in the UK tech sector exceed $15 billion.
The UK’s rapid growth in this sector means that it is now pulling away from its rival European tech hubs in Germany and France.
In fact, last year the UK was the third-biggest destination for tech investment behind the US and China, with the national tech industry now valued at $585 billion.
London remains an epicentre for tech investment, with the percentage of total UK venture capital investment made into London increasing from 73 per cent to 88 per cent between 2018 and 2021,
However, through the recent Budget and the Government’s wider plans, there is now a desire to bolster the UK’s tech sector outside of the capital.
The Tech Nation study also said that Britain was trailing on R&D spending, with some private companies investing more than the whole of the UK as a nation.
Thankfully, again the Government has pledged to increase spending in R&D, as well as supporting the private sector by continuing to incentivise investment through tax reliefs, such as the R&D tax credit scheme.
We have helped many clients in the tech sector launch their businesses, seek funding and claim millions of pounds worth of R&D tax credits, to find out how we can help, please speak to our specialist tech team.