Analysis of cross-border capital flows in Europe shows that the UK has a vital role to play in supporting European startups and is the second biggest investor into the continent, after the US.
Analysis prepared for Tech Nation and the Government’s Digital Economy Council by venture capital analytics company Dealroom.co shows that the UK supplied more than a fifth (21%) of $26bn invested in European tech companies in 2017. In the same year, UK-based investors made more individual investments in Europe than even US investors and the UK was the number one non-US source of money for most European countries.
The research shows the vital role that UK-based investors play in helping to build up startups and early stage tech companies across Europe and not just within the UK shores. The new figures show that UK-based investors made 1,365 investments in Europe in 2017, representing 21% of capital. US investors, who tend to fund growing companies at a later stage, made 1,067 separate investments in 2017, that represented 25% of the total capital invested in Europe.
Investors in France contributed 10% ($2.3 billion) and investors in Germany contributed 8% ($1.9 billion). Roughly 25% of total UK venture capital investment went to non-domestic startups across Europe.
UK-based investors were also the most active European investors across funding rounds of all sizes in 2017, consistently supporting European startups from creation to larger businesses with proven success.
The UK’s buoyant investment activity comes at a time when investors from outside Europe are also putting large sums into promising European tech companies, however non-European investors tend to invest in maturing European startups that have greater capital needs as well as proven business models. Overall, US investors contributed even more than UK investors (roughly 25%) to the $25 billion, while Asian investors contributed roughly 12%.
For the vast majority of European countries, the UK is the number one non-domestic European venture capital investor. For example, UK investors were behind 18% of all the capital invested into Spanish startups in 2017, 13% of the capital invested in Germany and 11% of all the capital invested into French startups.
Margot James, Minister for Digital and the Creative Industries, said:
“The UK is a haven for tech investment, with stellar investors helping to spread success across the country and bringing new jobs, wealth and improvements in productivity.
“UK-based investors also play a vital role supporting entrepreneurs and startups around the world, including in Europe where they are helping to spark new innovations that will improve how we live, work and interact every day.
“As we forge a new future outside the EU, we are determined to remain at the forefront of the continent’s technology sector and become the best place in the world to start and grow a digital business.”
Gerard Grech, chief executive Tech Nation, said:
“These figures demonstrate that the UK is the financial heart of Europe’s technology sector. Investors base themselves here in the UK not only because of our thriving startup scene, but because of the unique depth and breadth of experience in funding and building tech business ventures successfully.
“In 2019 our relationship with Europe will shift into a new gear, but these figures show that our connections across the continent are strong and that the leadership we provide in European technology provides a great base from which to grow and expand our global leadership in the digital tech sector’.