Tech Nation has published a report on the state of the UK technology sector in 2020/2021, and the results are quite encouraging. Despite the difficult conditions associated with the end of the Brexit transition period and the pandemic, the tech sector has proved its resilience. The amount of venture capital investments in the first half of 2021 was unprecedented more than $18 billion. That's already more than the sum raised in the whole year of 2020 last year British tech companies attracted $15 billion.
Significant tensions rose due to the Covid-19 pandemic and the UK's exit from the EU they plunged the country into economic uncertainty, which also affected the investment trends. The amount of financing in the first half of 2020 was notably lower. Nevertheless, in the second half of this difficult year, investments hit record high quarterly levels.
According to D. Shell, the CEO of Valla, the biggest challenge over the past year was to maintain and raise the pre-seed investment round. The company started raising investment in March 2020, just as Covid hit and many investors decided to halt all activity. Valla, like many other companies, overcame this by embracing the benefits of the situation they realised that it became much easier to plan online negotiations than face-to-face meetings.
In terms of VC investment, Britain ranked third in the world behind the US and China. This year the gap between the UK and those two global powers is closing compared to previous years. At the same time, investments in British DeepTech, such as artificial intelligence and blockchain, increased by 17% in 2020 this is the highest growth rate in the world. However, although UK DeepTech investment is third globally, the volume invested equals only around a tenth of that made into US companies $3.9 billion VS $36.7 billion.
In addition to the progress in the DeepTech sector, new trends include the growing popularity of educational and medical technologies.
The number of British EdTech companies increased by 72% in 2020, and, according to Vacancysof statistics, the UK gets more than 40% of all investments in the European education sector. The COVID-19 pandemic has acted as a hyper-accelerator for EdTech: the enormous demand for online learning services required new educational technologies.
The Health industry comes out on top in the UK overall, as the industry that tech will have the greatest impact on. Health and wellness companies raised $38bn in 2020, an increase from $28bn in 2019.
Climate Tech turned out to be another sector developing by leaps and bounds.
The United Nations Climate Change Conference is being held in Scotland in November 2021. The aim of the conference is to accelerate action towards the Paris Agreement and reducing greenhouse gas. VC investment is essential to supporting this aim alongside meeting UN sustainable development goals, specifically on Clean Water and Sanitation, and Affordable and Clean Energy. The UK saw a 21% increase in investment for climate tech and agriculture companies, reaching a record $798m in 2020.
Tech Nation has also pointed out the areas for future development which include the fastest growing sectors Mobility Tech, TravelTech, FoodTech, InsurTech. Nevertheless, investments in innovative technologies remain a priority.
Attracting foreign investors
Companies launching in the UK receive both internal and external investments — the latter have increased by 13% since 2016 and reached 63%. The support of foreign investors in 2020 is estimated at $9.4 billion half as much as the investments from within the country. Evidently, the UK tech ecosystem remains an attractive proposition for international investors, despite challenging conditions.
Behind the UK's investment boom is an eastward migration of venture capital from Silicon Valley 36% of last year's funding came from the USA. Moreover, mega-rounds are dominated by North American investors, who make up 62% of £250m+ deals.
UK's unicorn farm
The UK is the European champion of "unicorn farming" as of September 2021, the country is home to 105 unicorns. There were 7 new unicorns in 2020 and 15 in 2021.
The age of IT-immigrants
The UK welcomes foreign specialists with open arms: already 15% of all British startups are founded by immigrants and every second fast-growing company is headed by at least one foreign co-founder. According to a study by Oxford Economics, western influence on the development of tech talents is gradually waning the global picture of tech immigration is changing slowly but surely.
The Tech Nation report states that, in the light of the aforementioned changes, the demand for tech specialists is growing steadily. There are 3 million jobs in the technology industry at the moment, which is more than in construction (1.9 million) or in the financial services sector (1.2 million). Data processing specialists, ML engineers, and architects are of the greatest interest to British tech employers. The good news is that Tech Nation is focused on finding and retaining "foreign minds". The British government is doing everything in its power to simplify the immigration system for promising tech professionals. The UK has recently announced the Global Talent Visa which provides a fast track to working and living in the UK. "The Global Talent Visa has greatly facilitated the process of business relocation. One of the main advantages of this visa is the opportunity to work on the side while simultaneously navigating your company," notes Mikhail Sharonov, the co-founder of Immigram.
Since the launch of the Global Talent Visa in 2014, Tech Nation has received more than 4,200 applications from 90 countries. Russia is ranked 4th in the list of leading countries of origin after the USA, India, and Nigeria.
According to Anastasia Mirolyubova, Immigram's co-founder and relocation specialist, more and more Russian IT workers are considering moving to the UK: "Previously, all attention was focused on the Silicon Valley. Nowadays, London is on its way to becoming the new FinTech capital and the global startup/immigration hub. The overwhelming success of startups with Russian roots, such as Revolut and Arrival, spurs talented specialists to try their hand at the British tech ecosystem. Tech Nation is eager to study new applications — Immigram has had clients that received GT Visa approvals within a day. This fresh approach breaks down the stereotype of a complex bureaucratic immigration process."