#Investment in UK Startups Rising Despite Brexit

With all this weeks Brexit-related drama, and in the face of mounting evidence of law-breaking, cheating, and foreign interference, it would be fair to say that many in the EU are predicting a grim outcome for the UK post-Brexit. Businesses, in particular, are concerned about what the future outside the EU might hold for them. However, there has been at least onc good piece of news regarding Brexit recently.

Increased Investment

It seems that, in spite of a generally gloomy forecast, investment in startups in the UK has increased, and is now standing higher than it was prior to the Brexit referendum. This is a very welcome change to the raft of industry predictions, the vast majority of which have been negative thus far. For the many entrepreneurs who have been hesitant about starting any new ventures in the current climate, this represents a significant ray of hope.

The Tech Sector

Of particular note is the UK’s technology sector, historically one of the strongest sectors of the British economy. New research undertaken by Gil Debner, a former partner of Index Ventures, shows investment in the British tech sector is even stronger than it was in June 2016, prior to the referendum.

According to Dibner’s results, the number of deals being struck by venture capitalists each financial quarter has increased, going from 45 deals per quarter prior to the referendum, to the 69 deals per quarter that we are seeing now.

If you are one of the entrepreneurs who was assessing their next moves in the wake of the referendum result, this news could be significant. It shows that not only is the industry proving resilient, but investor confidence has yet to wane. If you have bad credit and aren’t able to secure investment from a venture capital firm, you can get a guarantor loan even if you have bad credit. The sector’s strong showing might give you the confidence you need to finally take the plunge.

Not only have more deals been struck between venture capital firms, but the amount of money that they have collectively raised has also defied expectations, soaring past the $1 billion mark (which equates to around £740 million), This compares with the £605 million or so that these startups were receiving each quarter before the referendum.

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Our Place in Europe

The UK has always been a hotbed of investment, especially for foreign firms who are looking to make in-roads to the EU. Being an English-speaking country has been hugely advantageous here, as English has essentially become the default international language. It seems that concerns about the UK losing this status post-Brexit have been, at least temporarily, allayed.

British startups have historically attracted more venture capital investment than any other country in Europe, accounting for £4.3 billion in total. Dibner’s research covered both European and Israeli startups over the year 2017. Some of the low-level deals were excluded, as was the rather anomalous £739 million of debt that Spotify took on in March of that year.

The Findings

Dibner’s research has taken a slightly different approach to that of previous similar efforts by looking not just at the total amount of capital raised, but also how many individual deals this investment total was spread over. We mentioned that Dibner excluded the Spotify deal from his research, this is because, especially when only the gross investment figure is being considered, a single deal can skew the data. Were Spotify’s £739 million to have been included, it would have added to the total an amount that is equal to the contribution of several smaller companies.

In assessing the UK’s performance, in comparison to both its own historical performance and that of its neighbours in Europe, the number of deals struck provides us with a much more useful metric than the raw total of those investments. With the number of deals to contextualise the gross amount of investment, it is much easier to assess the current strength of Britain as an investment destination.

Dibner’s research is in line with findings made by a number of other groups and researchers. For example, KPMG also noted an increase in venture capital investment and offered their own optimistic forecast for Britain’s future. However, an Atomico report in November of 2017 noted a decrease in the total number of venture capital deals. In spite of this, they still concluded that the UK was leading in both the total amount of investments and the number of deals being struck.

Dibner’s report is definitely good news for the UK, and for hopeful tech startups in particular. However, the researcher also made sure to sound a note of caution. Without a finalised deal between the UK and the EU, it is all but impossible to make predictions about the long terms future of the tech sector, or of British venture capital investment in general.

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