The GDP figures were not the only encouraging piece of news to cross the desk of Rachel Reeves, the new chancellor, on Thursday.
There was also news that the UK has retained its crown as the number one destination in Europe for investment by venture capital in the tech sector.
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Data published by Dealroom, the global provider of data and intelligence on start-ups and tech ecosystems, revealed that UK start-ups and scale-ups raised £7.4bn during the first six months of the year.
That was up 16% on the same period last year and accounted for nearly one-third of all venture capital funding in Europe during the six months.
UK tech companies raised more than their peers in France and Germany combined and more than five times their peers in Switzerland.
That was helped by a number of big funding rounds completed by individual businesses, led by Wayve, the autonomous vehicles technology firm. It raised £861m from investors in May and welcomed Rishi Sunak, the former prime minister, to its headquarters on the day the fund-raise was announced.
That month also saw the credit technology company Abound raise £400m while Highview Power, the long-duration energy storage firm whose backers include the UK Infrastructure Bank and Centrica, raised £300m last month – most of which is to be invested in what it hopes will be the UK’s first commercial-scale liquid air energy storage plant.
Other major fundraisings by UK tech companies during the first half of the year included ones by the online bank Monzo, which raised £150m in May and the electric vehicle charging group Char.gy, which last month raised £100m.
More to come
The second half of the year looks set to be just as strong.
The figures from Dealroom come a day after Index Ventures, the global venture capital firm well-known for backing the largest number of UK unicorns (start-ups to have achieved a valuation of $1bn or more), announced it had raised $2.3bn in two new funds to invest in start-ups – a chunk of which is expected to be deployed in the UK.
Dealroom’s figures suggest that tech companies specialising in energy attracted the lion’s share of funding during the first six months of the year, attracting some £4.3bn across Europe, with companies active in the generative AI space attracting some £2bn of money.
London is Europe’s centre for tech
The figures also reveal that London has maintained its position as Europe’s leading centre for tech investment during the first half of 2024.
Start-ups and scale-ups based in the UK capital attracted some £5.3bn in funding during the period – more than twice as much as second-placed Paris, whose start-ups attracted £2.4bn in funding and more than five times as much as third-placed Stockholm, whose start-ups raised £940m.
Cambridge, home to celebrated chip designer Arm Holdings, was also among Europe’s top 10 investment destinations, with its companies attracting some £517m, up 83% on the same period in 2023. Cambridge-based companies that raised money during the period included Luminance, the legal-focused generative AI business, which raised £321m in May.
Jeannette zu Furstenberg, managing director and head of Europe at the global VC firm General Catalyst, said: “These figures are very encouraging and demonstrate how Europe can be a key player in the immense economic opportunity unleashed by AI, which I like to call a European RenAIssance.
“Leveraging the power of AI to bolster European productivity and growth we believe will be key when building globally successful technology companies on this continent.
“The uptick in late-stage funding in the first half of this year we think demonstrates the appetite for Europe’s most ambitious companies.”
Hopes for the future
The figures will raise hopes for venture capital funding, which fell sharply from mid-2022 as interest rate rises around the world began to bite.
Separately, the British Business Bank – the UK’s state-backed economic development agency, has published figures suggesting that the UK has leapfrogged India to become the world’s third-biggest venture capital market to trail only the United States and China.
The figures come just a week after Mr Sunak, who was seen as an enthusiastic backer of UK tech, was ejected from office by voters.
However, despite Mr Sunak’s vocal support for UK tech, the sector was frequently disappointed by his government’s curbs on visas – making it harder to attract overseas talent.
The sector is, accordingly, keen to hear what Labour has to offer it.
The party’s manifesto had little to say about investment in tech start-ups and the tech sector has changed beyond all recognition since the last Labour government left office in 2010.
But it is hopeful that a more supportive approach to skilled migrants could further entrench the lead of UK tech start-ups over their peers in continental Europe – particularly in areas such as helping to commercialise the intellectual property and research coming out of the country’s universities.