TLDR:
- VC funding in the UK has dropped for the third consecutive quarter, with minimal rounds for later-stage companies.
- Venture capital investment reached £2.4bn in the first quarter of 2024, a 25% drop from the previous quarter.
Article Summary:
Venture capital (VC) funding in the UK has decreased for the third consecutive quarter, with a decline in late-stage funding rounds. According to the European Venture Report from PitchBook, VCs invested £2.4bn into UK tech firms in the first quarter of 2024, marking a 25% decrease from the previous quarter. The data also revealed that early-stage funding rounds were predominant, with over half (52%) of deals being at the seed stage. Late-stage rounds from Series B, C, and higher accounted for less than 5% of VC funding deals, indicating a scarcity of funding for later-stage companies.
The decline in investment levels has been linked to rising interest rates and macroeconomic pressures. Despite the continuous decrease in VC funding since 2022, the current levels are similar to those in 2020, suggesting a stabilization in the market. Fintech has emerged as the top funded sector in the UK, with digital bank Monzo raising £340m in a mega round in March. This trend was also evident in the European market, with a sustainable steel company securing significant debt financing.
The report highlighted the scarcity of funding for later-stage companies, attributing the decline in VC funding to macroeconomic factors. Despite the challenges, there remains a level of stability in the market, with the fintech sector leading in funding rounds. The data underscores the importance of addressing the lack of funding opportunities for later-stage startups to support the growth and development of the UK tech ecosystem.
