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Scotland Continues to Impress as UK Tech Attracts Record VC Investment

Ross Kelly

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Tech Nation Report

Britain is pulling away from other European tech hubs, including Germany and France, in terms of investment.

Britain’s tech sector attracted record levels of venture capital investment in 2020, according to the annual Tech Nation Report.

Despite the coronavirus pandemic and fears over the impact of Brexit, the Tech Nation Report shows that venture capital investment reached $15 billion last year, nearly $200 million higher than 2019.

Investment across the year increased steadily and reached a peak in December when $1.9 billion of investment was secured. These figures place the UK third globally in terms of venture capital investment, behind the United States ($144.5bn) and China ($44.6bn).

Similarly, this also places the UK as the leading European nation for attracting investment, far outpacing Germany and France who rank fifth and sixth respectively.

Commenting on the report, Digital Secretary Oliver Dowden said: “With record levels of investment secured and UK listings gaining momentum, this report shows Britain’s tech sector continues to go from strength to strength, solidifying our position as one of the world’s top tech hubs.”

Gerard Grech, Founding Chief Executive of Tech Nation, added: “This year has highlighted the UK tech sector’s enormous resilience and world-beating innovative spirit.

“In the face of a major global crisis, it has not only survived; in many areas, it has boomed.”

Driving innovation

Innovation hubs across the UK are driving investment, according to the Tech Nation report, with London, Oxford, Bristol and Edinburgh all performing well.

Last year, Edinburgh attracted £91 million in VC funding, ranking it fourth in the UK. Glasgow also experienced a landmark year for venture capital investment, with £35 million secured across 2020.

Compared to the year previous, which saw £11 million, this constitutes a record increase of more than 200%.

Although the report highlights improvements for regional tech hubs, there are still significant strides required for Britain’s regional tech ecosystems.

The Tech Nation Report raises concerns over the spread of venture capital investment moving forward.

Investment continues to gravitate towards London despite the best efforts of regional hubs and this gap has grown consistently over the past three years.

The report recommended more support for tech ecosystems outside of London, as well as the development of “more targeted” regional investment funds that have the “firepower and risk attitude” to level the playing field for firms outside of London.

Superstar Scaleups

Fuelling growth are some of the country’s top startups and scaleups. Valued at $585bn, Britain’s top tech companies have doubled their collective value since 2017.

“In comparison, the next most valuable European scaleup ecosystem, Germany, was valued at $291bn,” the report added.

Ten ‘superstar scaleups’ earmarked by Tech Nation secured 20% of Britain’s total venture capital investment last year at $3.5bn.

Online events platform, Hopin, raised $150 million in 2020 and has since gone on to raise an additional $400 million Series C funding round led by US firms.

Challenger bank Revolut and insurance platform, Ki, also helped to secure the country’s position for fintech and insurtech, with the former raising $580 million over the course of the year.

Trailblazing sectors

Figures from the Tech Nation Report show that Britain still ranks second in the world for venture capital investment in fintech, although funding did fall by 23% to $4.5bn.

Investment in Net-zero was also transformed in 2020. Across the year, Britain rapidly increased investment into impact startups, with investment more than doubling since 2018 to $2.6bn.

This places the UK third globally for impact tech investment, once again placed behind the United States and China.

Loral Quinn, CEO and Co-founder of Edinburgh-based startup, Sustainably, said the report underlines the growing strength of Scotland’s tech ecosystem as well as a cultural shift toward investment in purpose-driven businesses.

She said: “With investment in impact startups doubling, the challenge now is how the UK can best leverage investment and R&D to be a world leader in disruptive tech, creating positive impact that is effortless, embedded and sustainable.

“The good news is that we have a thriving tech ecosystem, record levels of investment from VC in 2020 and tech and consumer internet companies increasing their share of capital raised through IPOs.”


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So far in 2021, Britain has experienced an all-time high for investment, with funding topping $7.6bn. This marks a 124% increase on Q1 last year and far exceeds investment in Q4 of 2020.

Despite a positive start to the year, UK tech still faces “significant challenges” in an “increasingly competitive global landscape”, Tech Nation said.

Britain will likely see challenges presented by global capital flows and R&D shortfalls. Currently, the UK is trailing on R&D, the report suggests, with some private overseas companies investing more in R&D than the UK.

Data from the ONS shows that UK R&D expenditure – encompassing both public and private spending – was just under £30bn in 2018.

In the same year, the combined R&D spend of Amazon and Alphabet stood at £33bn. When compared to global competitors, Britain also lags behind significantly.

Total R&D expenditure in the US reached $551bn in 2018 while China’s R&D spending topped $463bn.

Ross Kelly

Staff Writer

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