The UK tech sector has achieved a record high foreign investment level of £5.5bn so far this year. This amounts to a higher per capita investment level than so far evidenced for the same period within the US tech market, according to latest statistics published by the Department for Digital, Culture, Media, and Sport.
What Does This Increased Investment Mean For The UK?
The main reason for the increased foreign investment in the tech sector is down to the weak pound, however, the UK is still classed as the European leader when it comes to funding tech businesses.
These investment funds have mainly been sourced from US and Asian lenders, who have collectively funded a total of £3.02bn ($3.7bn), which is significantly higher than the total $2.9bn invested in the sector for the year 2018.
This surprise announcement has bucked the UK’s overall foreign investment trend which has seen cuts to levels of funding due to uncertainty over Brexit and the future of trading within the EU.
The Department for International Trade has already announced that foreign direct investing reached a six-year low for the period of June 2019.
Nicky Morgan, the UK Culture Secretary, commented:
“These fantastic figures show the confidence overseas investors have in UK tech, with investment flows from the US and Asia at an all-time high. We have a long-standing reputation for innovation and the statistics endorse our reputation as one of the best places in the world to start and grow a digital business.”
Asia is an attractive source of funding for UK tech startups and growing SMEs, as finding the right investor can help open up the Asian marketplace.
Aditya Mathur, the MD of elev8.vc a Singapore venture capital fund, said:
“I’ve seen a lot more requests from UK start-ups tapping Asian markets capital financing in comparison to a year ago. They typically want access to the Asian market that is large and diverse, and for that, they need an Asian investor to help them understand these markets, and also provide the kind of financing they’re looking for.”
Investing in UK tech can also be a win-win scenario for Asian investors, as it helps hedge against the existing trade war between China and the United States.
The most attractive investment opportunities at the moment are perceived to be in the financial sector and the fintech marketplace.
One of the biggest deals in recent months was an $800mn investment from Softbank of Japan in Greensill, a UK company which provides short term business loans.
OakNorth Bank is another business lender which has benefited from a cash injection of $400mn, sourced from Softbank and the Clermont Group, which is based in Singapore.
How much this overseas funding will eventually impact on the UK tech sector remains to be seen, as Brexit is a major worry for investors and UK businesses, however, all signs are looking bright for UK tech at present.