Fintech is back on top in the UK Tech Investment sector according to new analysis from HSBC Innovation Banking and Dealroom. In 2023, energy surpassed fintech to be the UK’s most funded startup sector for the first time. But In Q1 2024 with $1.4B raised across 73 rounds including notable late-stage rounds for Monzo, Flagstone and PPRO, fintech is back.
Frontier technology segments, semiconductors and quantum computing have also been gaining momentum and were among the top-funded UK tech segments in Q1 2024 raising $314.7M and $300M respectively for startups often based in science hubs like Cambridge and Oxford.
VC investment levels stabilising following sharp global reset
Overall, UK startups raised $3.9B in Q1 2024 and there are signs that VC investment levels in the UK have stabilised following a sharp global reset from H2 2022.
Early-stage investment in Q1 closed higher than the two previous quarters at $1B. Investment at breakout stage of Series B and C is steady. Late-stage rounds, which have the biggest impact of headline totals, remain in single figures but totalled $1.4B, a significant increase compared to the same quarter last year, pointing to a potential return of megarounds (deals of $100B+).
Edinburgh, Brighton and Cambridgeshire are fastest growing UK hubs in 2024
While London remains the number one city in the UK (and Europe) by venture capital raised in 2024, funding continues to be distributed to innovation hubs across the country.
Edinburgh (406%), Brighton (209%) and Cambridgeshire (59%) have shown the most growth in venture capital this year compared to 2023. This was largely driven by significant rounds for a diverse set of companies, including videogame developers Build a Rocket Boy (Edinburgh), drug discovery company Enterprise Therapeutics (Brighton) and quantum computing firm Quantinuum (Cambridge).
UK retains European lead for venture capital
Globally, the UK remains the number one destination in Europe for startup innovation and investment. UK startups raised almost as much as German and French peers combined in Q1 2024 ($2.3B and $1.7B respectively). The UK also remains third globally, behind just the US and China, and ahead of India.
More than half of UK venture capital comes from overseas investors, which shows the UK remains a world-class destination for tech investment. The largest proportion of investment comes from the USA (39%), which was just ahead of the 36% of funding that came from domestic UK investors, followed by Europe (12%) and Asia (10%).
Simon Bumfrey, Head of Technology and Life Sciences at HSBC Innovation Banking UK said:
“This data reflects a busy start to the year for the UK innovation ecosystem – from growth in investment in established and emerging areas like fintech and quantum computing to expansion of regional tech hubs across the length and breadth the country, there is much to celebrate. We remain optimistic and excited about UK innovation in 2024 and are committed to supporting and partnering with innovators, investors and the broader ecosystem.”
