The third quarter of 2024 marked a significant decline in UK startup investment.
- Venture capital funding dropped by 50% from the previous quarter, totalling $2.9bn.
- The fintech sector remains the top-funded tech sector in the UK despite a decline.
- Health tech climbed to the second position in funding secured, led by major investments.
- Overseas investment played a crucial role, accounting for 70% of the funding.
The third quarter of 2024 witnessed a notable downturn in venture capital funding for UK startups, marking the lowest investment level in the past five years, with a sharp 50% drop compared to the previous quarter. This decline sees British startups accumulating $2.9 billion, according to a newly released report from HSBC Innovation Banking and Dealroom. While these figures create an impression of a struggling investment landscape, the funding levels remain broadly consistent with those observed in 2023.
Despite the overall decrease, the fintech sector holds its position as the best-funded tech field this year, attracting $3.3 billion, a reduction from $4.5 billion in 2023. Remus Brett, a general partner at LocalGlobe, conveyed optimism about the sector’s resurgence, stating, “The UK fintech sector is back. Many scaleups…are making a serious dent in incumbents’ market share.” Significant funding rounds included Monzo’s £340m investment, later extended to $610m.
Health tech emerged as a key player, securing the second-highest funding among tech sectors. Notable investments like Flo Health’s £156m Series C and Myricx Bio’s £90m Series A have propelled the sector to raise $2.3 billion. Commenting on the sector’s prospects, Simon Bumfrey, head of technology and life sciences at HSBC Innovation Banking UK, expects continued growth as interest from domestic and international investors remains robust. Bumfrey noted potential opportunities within the “UK innovation ecosystem” and highlighted a positive outlook for the coming years.
An intriguing aspect of the report is the significant contribution of overseas investors, who provided 70% of the venture capital for UK startups in 2024. This level of international involvement is amongst the highest in the past decade, surpassed only in 2019 and 2021. The UK’s startup ecosystem remains the most well-funded in Europe, with a total of $12.4 billion so far, outpacing Germany and France.
In conclusion, while UK startup funding faces challenges, fintech and health tech sectors demonstrate resilience, supported by substantial international investment.
The UK’s fintech and health tech sectors exemplify resilience amid decreased overall startup funding, benefiting from strong international investment.
