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June 2020 Bristol’s Clifton Suspension Bridge. Photo by Vadim Sherbakov. Supported by the Digital Economy Council and the Department for Digital, Culture, Media and Sport UK Tech Ecosystem Update London Tech Week 2020: UK Tech Ecosystem Update Monthly venture capital investment amount Monthly number of venture capital rounds >$2 million June 2020 | Check underlying data via https://datacommons.technation.io UK tech companies continue to raise hundreds of millions every month, and VCs are still active in H1 2020. ● VC is a lagging indicator, with much month-to-month volatility. ● The impact of Coronavirus will become more apparent over time. ● UK government co-investment Future Fund opened 20th May, boosting funding prospects. ● Significant funding rounds are still being closed. Venture capital investment in UK by round size Top UK rounds in 2020 $500M London $360M London $150M London $150M Bristol $120M London $130M Abingdon $103M London $100M London $94M London $99M London $87M Abingdon $83M London $80M London $80M London $80M London London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io Jan - May UK tech companies are well capitalised, after raising record amounts of venture capital in 2019. There have been 15 UK rounds over $80M in 2020. London has raised more VC investment than Paris, Stockholm, Berlin and Tel Aviv combined in 2020, although most deals would have been agreed before the crisis. Venture capital investment in London by sector (2020 YTD) Venture capital investment by city/hub 2019 2020 YTD London $10B $4.0B Paris $3.2B $1.8B Stockholm $2.4B $0.7B Berlin $4.5B $0.7B Tel Aviv $2.2B $0.6B London Tech Week 2020: UK’s Startup Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io Source: Dealroom.co. London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io Despite challenging macro conditions, UK tech is still outperforming all European neighbours in 2020. Venture capital investment Note: Investment data for 2020 until May 31st. United Kingdom: 7 Israel: 6 France: 4 Germany: 3 Rest of Europe: 3 London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io New unicorns since last London Tech Week The UK ranks #1 in Europe for unicorns, built on a decade of consistent growth. Source: Dealroom.co. A generation of world-leading UK scaleups were born during the last financial crisis. London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io Tech companies founded between 2008-2011 View all » Fintech 2011 Valued at $3.5B (May 2019) $360M Total funding Private 2011 Valued at $3.5B (Oct 2019) $1.6B Total funding Private 2009 Valued at $893M (Nov 2019) $111M Total funding Acquired Marketplace & Energy 2008 Valued at $4.5B (May 2020) $638M Total funding Public 2008 Valued at $2.7B (May 2018) $30M Total funding Acquired 2008 Valued at $1.2B (Nov 2019) $240M Total funding Private AI & Deeptech 2010 Valued at $480M (Jan 2014) N/A Total funding Acquired 2008 Valued at $250M (Feb 2016) $20M Total funding Acquired 2008 Valued at ~$216M (May 2020) $99M Total funding Private Healthcare 2008 Valued at $780M (Mar 2020) $445M Total funding Private 2008 Valued at $620M (May 2020) $98M Total funding Public 2008 Valued at $200M (May 2020) $60M Total funding Public ● The last financial crisis instigated an entrepreneurship boom in the UK. ● “Silicon Roundabout” was coined as a joke in 2008 about a small cluster of startups; there are now over 35,000 startups & scaleups across the UK. ● The UK’s first co-working spaces opened in 2008/09; there are now 260 across dozens of UK towns and cities. ● With a highly-paid, work-from-anywhere workforce, the UK tech sector could be a resilient employer. ● With the right skills and incentives, we could soon see the birth of the next generation of UK tech scaleups. London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io The UK also ranks #1 in Europe for potential future unicorns, with over 100 companies valued at $250M-$800M Number of potential future unicorns Source: Dealroom.co. New funds raised by VCs in UK 0M-$50M $50M-$100M $100M-$250M $250M+ UK VCs have record levels of dry powder ready to deploy in 2020 and beyond. Seed Series A+ Growth stage $140M Feb 2019 $2B Apr 2020 €463M Jun 2018 $115M Jun 2019 $820M Feb 2020 $477M Mar 2019 $100M Apr 2020 $735M Feb 2020 $375M Mar 2018 $81M May 2018 $500M Nov 2019 €300M Mar 2019 $80M Sep 2019 $400M Nov 2019 Latitude: $180M Dec 2018 $63M Jun 2018 $185M Jan 2020 £83M Apr 2019 Over $10 billion raised by VCs in UK in 2019-2020 alone. Almost half of the $22 billion raised by European VCs. London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io Note: VC funds data for 2020 until May 31st. Foreign investment is a sign of strength, with the UK investment landscape diversified for resilience. % of foreign investment (2020YTD) by country and source For Israel and the UK, the high proportion of foreign investors reflects strong global investor appetite, especially from the USA and Asia (a sign of strength). Germany and Sweden now has the lowest % of domestic capital of any major tech hub. France wants to attract more foreign capital, especially from the USA and Asia. London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io Note: Investment data for 2020 until May 31st. 40% assess their runway at less than a year. 43% have stopped online advertising. 30% of startups have cut salaries across the company by at least 15%. 49% of respondents have frozen hiring, another 32% have slowed hiring. 68% of respondents expect full-year revenues to drop more than 25% of forecast. 39% of business-to-consumer startups saw March revenues drop by over 50%. 18% of business-to-business startups saw March revenues drop by over 50%. 33% don’t believe they’d qualify for any loan though they may be interested. 41% are considering venture debt. 16% have committed to laying off at least 10% of staff. A survey run between April 6th and 17th in partnership with UK tech companies are adjusting to navigate Covid-19 - survey results based on the responses of 200 VC-backed UK companies. London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://public.flourish.studio/story/279152/ Source: LocalGlobe & Latitude survey, in partnership with 16 other UK VCs, conducted 6-17 April 2020. Based on 200 responses. London Tech Week 2020: UK Tech Ecosystem Update June 2020 | Check underlying data via https://datacommons.technation.io 1. Based on the number of VC-backed startups & scaleups based in the United Kingdom. 24%(1) Net positive 1,731 startups Digital health (833) Babylon Health, BenevolentAI, Zava med, Pharmacy2u Food delivery & E-grocery (417) Ocado, Gousto, Graze, Butternut box Gaming (167) Improbable, Playtonic Games, FACEIT Dating (20) muzmatch, Badoo, Lumen 66% Defensible or short-term impact (V-shaped) 5,100 startups Cleantech (390) Octopus energy, Bulb, Highview power Education (286) Immersive labs, A Could guru, Memrise, BibliU Banking & Insurance (208) Revolut, Greensill, Monzo, OakNorth Bank Cyber security (236) Mimecast, Snyk, Tessian Marketing (596) Ogury, Exponea, Tray Proptech (260) Purplebricks, Nested, Yopa Jobs & Recruitment (194) Beamery, Coople, Adzuna Robotics & Automation (83) Graphcore, Blue Prism, CMR Surgical 10% Prolonged impact (L-shaped recovery) 744 startups Mobility (305) Cazoo, Trafi, Carwow Travel (199) Secret Escapes, Lastminute, TravelLocal, ClickTravel Events (120) Pollen, Ticketscript, Velocity The pandemic will impact certain sectors in different ways. London Tech Week 2020: UK Tech Ecosystem Update UK city Number of roles advertised in 2019 Number of digital tech roles in 2019 % Digital tech roles Median salary for all roles (2019) Median salary digital tech roles (2019) Digital tech salary vs. all roles (% difference) Median salary digital tech roles (2018) Change in Digital tech salary (2018-2019) London 3459263 658275 19.03% £35,000 £55,000 23.64% £53,296 3% Birmingham 251017 46723 18.61% £30,000 £40,000 12.50% £37,500 7% Glasgow 148908 33378 22.42% £27,500 £40,000 35.00% £39,000 3% Edinburgh 156338 35786 22.89% £28,000 £44,938 17.66% £42,500 6% Belfast 53041 13687 25.80% £30,000 £40,000 15.00% £40,000 0% Manchester 611936 108859 17.79% £26,400 £37,500 9.33% £35,000 7% Cardiff 109242 23334 21.36% £28,000 £37,500 12.00% £35,000 7% Newcastle 87648 18501 21.11% £25,920 £35,000 5.71% £35,000 0% Leeds 258757 56149 21.70% £27,500 £36,500 12.33% £35,000 4% Sheffield 111996 22000 19.64% £25,000 £32,500 7.69% £32,500 0% Cambridge 228958 58678 25.63% £30,000 £40,000 5.00% £39,000 3% Bristol 320920 76267 23.77% £28,000 £40,000 15.00% £35,520 13% Bath 51762 9680 18.70% £26,990 £37,500 33.44% £34,500 9% Reading 122398 28033 22.90% £30,000 £42,500 12.94% £40,000 6% Oxford 233901 44979 19.23% £27,500 £38,000 10.53% £36,000 6% Source: Tech Nation 2020; Adzuna / 13 June 2020 | Check underlying data via https://datacommons.technation.io 2.93M people are now employed in well-paid tech jobs, across the UK. London Tech Week 2020: UK Tech Ecosystem Update ● Digital tech job adverts are still significantly higher than those in other sectors Source: Tech Nation 2020; Adzuna / 14 June 2020 | Check underlying data via https://datacommons.technation.io Digital tech vacancies have declined sharply, but many companies still hiring London Tech Week 2020: UK Tech Ecosystem Update ● The last financial crisis instigated an entrepreneurship boom in the UK. ● Increased company creation is a common outcome of economic downturn. ● Social distancing is accelerating digital adoption of all kinds. ● Tech companies are inherently adaptable, and optimised for distributed working. ● For the first time in history, reskilling can happen at scale and at a distance. ● Investment in digital skills and entrepreneurship is essential. ● Right now there is the potential to sow the seeds for another decade of growth. Source: Tech Nation, 2020; ONS, 2019 / 15 June 2020 | Check underlying data via https://datacommons.technation.io Business birth rates in the UK picked up after the last two major recessions (2002-2004 and 2012-2016). London Tech Week 2020: UK Tech Ecosystem Update ▪ Investment numbers refer to venture capital investment rounds such as seed, series A, B, C, …. late stage, and growth equity rounds. It excludes debt or other non-equity funding, lending capital, grants and ICOs. ▪ Buyouts, M&A, secondary rounds, and IPOs are treated as exits: excluded from funding data, but included in exit data. ▪ A unicorn is defined as a tech driven company that has reached a $1 billion valuation, on the basis of a funding round (unrealised), acquisition or IPO (realised). ▪ There are some notable edge-cases: - Companies that IPO-ed at or above $1 billion but subsequently dipped below that valuation, are still included as $1B+ exit (examples: Alfa, Rovio, eDreams). - Some companies have at some stage reached a $1 billion but subsequently raised, IPO-ed or were acquired below that value. In this case the company is not counted as a unicorn (examples: Blippar, Home24, Fanduel, Ulmart, Conduit, Wonga, VE Interactive, Powa). - If a unicorn moved HQ, the company is counted in the country where it reached unicorn status. Occasionally companies received dual HQ status. ▪ This report focuses on companies in the post-internet age, i.e. after 2000. Most but not all unicorns are VC backed. ▪ Companies included in the analysis are tech-driven. Industries include software, ecommerce, online marketplaces, hardware, ICT infrastructure. The full industry & business model taxonomy can be found online ▪ Dealroom’s proprietary database and software aggregate data from multiple sources: harvesting public information, user-submitted data verified by Dealroom, data engineering. All data is verified and curated with an extensive manual process. ▪ Most underlying data from the report is available online via https://datacommons.technation.io. For more info please visit dealroom.co or contact support@dealroom.co June 2020 | Check underlying data via https://datacommons.technation.io Methodology & definitions The most complete and detailed picture of UK’s tech ecosystem, in partnership with Tech Nation: datacommons.technation.io startups & scaleups Accelerators, workspaces funds & corporate investors Funding rounds & exits Initiated by For founders Know your ecosystem Get inspired For VCs & corporates Discover hot startups & scaleups. Get new insights & trends For researchers Apply for data access, to support your research projects. For governments Better understanding of startup ecosystem dynamics Visit https://datacommons.technation.io/ Powered by Supported by To discuss partnership opportunities, contact support@dealroom.co