The UK again topped European league tables for venture capital investment in 2018, attracting £6.3bn ($7.9bn) in funding from investors, according to new figures from Dealroom and Tech Nation. Over the same period the UK also had a landmark year for exits: achieving sales, IPOs and mergers worth $40bn, ahead of every other country in Europe including Sweden, the source of Europe’s single biggest IPO in 2018.
Over the last five years, the UK has emerged as the biggest source of successful company exits in Europe with sales and IPOs worth $119bn since 2013. During 2018, landmark exits included online luxury retailer Farfetch and gene therapy company Orchard Therapeutics, which both floated in New York. Funding Circle, a peer-to-peer lending marketplace, floated in London and there were significant tech sales including property portal Zoopla’s $3bn sale to US venture capital group Silver Lake.
Sweden ran the UK close during 2018 achieving sales and exits worth $34bn, but the figure was largely down to the $29bn landmark floatation of Spotify. iZettle, the fast-growing Swedish payments business, also agreed a sale to Paypal for $2.2bn.
The rate of successful exits of venture capital backed companies is one measure used by investors and commentators to calculate the success of a tech sector. Over a five year period, Sweden has achieved $55bn of sales and IPOs, while Germany has achieved $44bn.
During 2018, Europe also closed the gap on the US in terms of exits of venture-backed companies. The US achieved $136bn of deals and IPOs in 2018, while European sales and IPOs added up to $107bn. Three of Europe’s 10 biggest exits were of companies based in the UK: Farfetch, Sky Betting & Gaming and Zoopla.
End of year figures from analytics company Dealroom for Tech Nation and the Government’s Digital Economy Council show that the UK continues to be the most attractive destination in Europe for venture capital, with UK firms attracting 1.8 times more venture capital investment in 2018 than France and 1.6 times more than Germany.
Figures from Tech Nation confirm the UK’s tech sector continued to make a strong contribution to the economy in 2018, with 75% higher productivity in UK tech compared to the whole of the UK economy and people working in jobs requiring digital skills are on average paid £10,000 more than non-digital roles.
Digital Secretary Jeremy Wright said: “These brilliant statistics round off another bumper year of investment in our digital economy and show the UK is Europe’s undisputed tech hub. The success is thanks to our unique combination of talent, location and language, alongside our business friendly environment, unrivalled access to capital and world-leading universities. We are determined to make the UK the best place to start and grow a business, and through our Digital and Industrial Strategies we want to see the power of technology change people’s lives for the better.”
Gerard Grech, chief executive, Tech Nation, said: “This has been another great year for the UK digital tech sector which continues to show that this nation is a digital tech powerhouse, attracting more money from venture capital than any other country in Europe. Businesses that were started here are scaling to become global success stories, as the level of large funding rounds and successful IPOs demonstrates. Connecting great scaling companies across the country, so that they can learn from each other as they grow, is a key part of Tech Nation’s role because this in turn brings higher innovation and productivity, creating more jobs and economic growth.”
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