Venture Capital in the UK
Over the past decades, the United Kingdom (UK) has become one of the world’s most established startup ecosystems thanks to a variety of factors including a wealth of world class education hubs, a thriving job market, and a beneficial regulatory environment.
On a European scale, the UK is considered a leader in the tech startup space, with London being one of the top global hubs for startups and venture capital, attracting over $20B in VC investment in 2022.
On a global scale, the UK ranks 3rd globally for VC investment as well 3rd globally for total ecosystem value, home to over 160 unicorns and 40k+ startups, all of which can be explored on the Dealroom platform.
Venture capital investment
Venture Capital investment in the UK reached $31B in 2022, a 25% drop from 2021. While this is a significant drop from the heights of 2021, it is still 77% higher than in 2020.
Greater London continues to make up the larger share of the total venture capital investment, driving 70% of total investment in 2022.
Although Greater London remains the top hub in the UK and where venture capital activity is most intensified, other regions are emerging throughout the country.
East Midlands, Northern Ireland, Yorkshire and the Humber have more than doubled in investment growth over the past three years.
When inspecting early-stage VC investment (<$15M), we see Belfast, Sheffield and Cardiff experience the highest positive growth during the past year. While the leading UK ecosystem, London, experienced a 17% drop against 2021, 2022 still saw a 10% growth in investment raised when compared to 2020.
The top three UK industries for venture capital investment in terms of total investment raised in 2022 are Fintech, Health, and Energy, which combined account for over half of total VC investment nationwide for 2022.
UK compare with Europe
When comparing industry investment for the UK and Europe, we see a much higher degree of investment into Fintech within the UK though Transportation and Food related startups receive a higher proportion of investment in Europe.
Sources of capital
Since 2021, the US has outfinanced and outfunded domestic sources of capital into the UK ecosystem, contributing just over a third of total capital for UK-based startups.
Over the past decade, VC firms have consistently made up between 40-50% of total funding into the UK startup ecosystem with this trend being seen in other developed European startup ecosystems such as the France and Germany.
UK's most active investors
Most active investors in UK startups
Unicorns and future unicorns
The UK startup ecosystem has minted 160+ unicorns, and 245+ future unicorns.
After the peak in new unicorn creation 2021, last year both new unicorn and new future unicorn creation slow down significantly, signalling that new unicorns are once again becoming rare beasts.
For more information, visit the Dealroom platform to view all existing UK unicorns and future unicorns.
Global and European comparisons
The UK's startup ecosystem ranks 3rd globally in terms of VC investment raised, a position it has maintained since 2019 with the exception of 2021. The UK leads in the European continent for VC investment, raising over double the amount compared to its closest European counterpart, France for 2022.
It's important to note that despite the challenging economic climate and the negative growth in VC investment compared to 2021, the UK ecosystem showed improved resilience when compared to half of the top 10 largest ecosystems including the United States, China and Germany.
When comparing individual ecosystems within the UK against its European counterparts, London leads the continent, raising more than Paris, Berlin and Munich combined for the year of 2022.
Other British hubs such as Oxfordshire, Cambridgeshire and Greater Manchester compare well against other European hubs and help the UK diversify their talent pool across the nation.
Manchester, part of the UK's Northern Powerhouse, has been establishing itself as an ever more important ecosystem in the UK over the past decade. Manchester is home to over 1k startups and 8 founded unicorns. As well as this, the city compares well against other similarly sized ecosystems, as seen in the table below.
Manchester also benefits through being well-connected to other large startup hubs in the UK, with the likes of Liverpool, Glasgow and Edinburgh just a short train journey away, and the country's biggest hub London just under three hours away by train.
The map below showcases Manchester's connectivity to other key players in the UK wide startup ecosystem.
Reports: UK tech ecosystem year in review
Reports: EV Battery Tech UK report
Reports: Browse all existing UK reports on Dealroom
Dealroom Data: Explore all UK startups and scaleups
Dealroom Data: Explore all UK funding rounds