Investors are putting more money into UK startups now than before Brexit
- Tech startups and investors had feared that the Brexit vote would cause a slowdown in funding to emerging British companies.
- New research suggests this isn't happening yet, with the amount of investment and the number of deals struck actually higher after the Brexit vote than before.
- 18 months after the referendum probably isn't long enough to see the full impact of Brexit, and many tech founders and investors believe the UK will see talented European founders decide to move elsewhere.
Investment in UK startups is higher after Brexit than it was before the referendum, bucking industry predictions that funding and activity would slow down.According to research from former Index Ventures partner Gil Dibner, there were more investments into British tech startups after the referendum in June 2016 than previously.
Dibner found an average of 69 deals per quarter post-Brexit, compared to 45 deals per quarter pre-Brexit. Startups also raised more, at more than $1 billion (£739 million) per quarter post-Brexit, versus $819 million (£605 million) pre-Brexit.
And British startups still attract the most venture capital in Europe, accounting for $5.7B of VC investment.
Dibner's research covers investment in European and Israeli startups in 2017, excluding some low-level seed deals and Spotify's $1 billion (£739 million) debt raise in March.
One reason why his findings are interesting is that it looks at the number of deals, and not just the amount UK startups raised in total. A total figure can be skewed by mega-deals, like Softbank's unprecedented $500 million (£369 million) investment into gaming startup Improbable, or food delivery firm Deliveroo's $482 million (£356 million) raise. But a rise in the number of deals suggests that, for now, venture capitalists are still confident in British startups.
This doesn't mean Brexit will be good for the tech sector in the long run, and Dibner himself noted this could all change. "[It's] too early to see the real impact of Brexit, which will manifest as fewer EU founders moving to UK," he wrote.After the UK, Israel brought in the most investment at $3.9 billion (£2.9 billion), with Germany following at $2.9 billion (£2.1 billion) and France with $2.4 billion (£1.8 billion). Investors stumped up $20.1 billion (£14.8 billion) in total across Europe and Israel, which Dibner describes as a record. Startups raised $14.5 billion (£10.7 billion) in 2016.
Dibner's research is in line with several other reports. In April, KPMG found that venture capital investment in the UK was up and said the sector should be optimistic.
An Atomico report from November found that the number of deals to the UK had actually fallen in 2017, to 728 from 762 in 2016. It still found the UK led both in terms of the amount of investment raised and the number of deals struck.