Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Quarterly Report: UK Tech Q1 2024.
The report, based on Tracxn’s extensive database, provides insights into the UK Tech space and reveals that, while the United Kingdom is currently the sixth largest economy globally, its tech startup ecosystem ranks third in terms of funding raised in the first quarter of 2024, after the US and China.
This is despite the fact that UK tech startups saw a YoY fall of 18% of funds raised, to $2.5bn in Q1 2024 (to March 15, 2024), from $3.06 billion raised in the same period in 2023. The figure also represented a 19% quarterly drop from the $3.09 billion raised in Q4 2023 (to December 15).
Late-stage investments were the most affected in the first quarter of 2024. Companies in this space secured late-stage funding worth $1.2 billion in Q1 2024 to date, a decline of 33% compared with the $1.8 billion raised in Q4 2023 and an 8% decrease from the $1.3 billion raised in the same period in Q1 2023. Early-stage funding stood at $963 million in Q1 2024, a drop of 7% compared with $1 billion raised in Q4 2023 and a fall of 24% from $1.3 billion raised in the same period last year.
Seed-stage investments grew 12% to $288 million in Q1 2024 to date from $259 million raised in the same period in Q4 2023. However, it is a drop of 27% compared to $398 million raised in the same period in Q1 2023.
In Q1 2024, only four companies reported $100M+ funding rounds – including Edinburgh games developer Build a Rocket Boy. The other £100m+ raises were by fintechs Monzo and Flagstone and hospitality tech Mews. Mews was also the only new Unicorn to emerge during the quarter, after raising $110 million in a Series D round that valued the company at $1.2 billion.
FinTech, Enterprise Applications, and Life Sciences were the top-performing segments in the UK tech sector, based on funding in Q1 2024. The FinTech sector secured a total funding of $1 billion in Q1 2024 to date, a drop of 8% compared with $1.18 billion raised in the same period in Q4 2023, and a 12% decrease from $1.24 billion raised in the same period in Q1 2023. Companies in the Enterprise Applications space saw a sharp surge of 90% in funding, to $950 million in Q1 2024 to date, from the $500 million raised in the same period in Q4 2023.
A slight improvement was observed in terms of exits. A total of 105 acquisitions were observed in Q1 2024 to date, as against 91 in the same period in Q4 2023. Only two companies – AWAKN and Perfect Moment – have gone public in the first quarter of 2024, an uptick from Q4 2023 when no IPOs took place.
London continues to dominate the funding landscape. Startups based in the capital raised $1.7bn in Q1. Edinburgh placed second with $130m raised.
Q3 2020 was the highest funded quarter in the UK tech startup ecosystem to date, followed by Q1 2022, since when funding has been on a general downward trend.
