UK tech on track for second record-breaking year of Asian investment
The booming UK tech sector received almost twice the amount of Asian capital in the first six months of 2021 as it did during the whole of 2020, paving the way for a second record year of regional investment.
By the end of June, Asian and Middle Eastern investors funnelled over £1.7bn into UK tech companies, equating to 13.2 per cent of total investments made in the country.
The figures for the year so far stand at almost double the £1bn capital invested during the whole of 2020, according to new data compiled by Dealroom for the Department of Digital, Culture, Media and Sport’s Digital Economy Council.
Japan’s Softbank led the way as the biggest Asian investor in UK tech, followed by Singapore’s GIC and Temasek, Hong Kong’s DST Global, and China’s Tencent.
But while Japan has been the dominant investor for the past few years, the UK’s fast-growing tech startup scene has received an influx of investment from the Middle East since 2016.
Between 2016 and 2020, Japan’s investment in UK tech shrunk from 72 per cent to 24 per cent, as other investors in the region stepped up their backing. Notably, the UAE now accounts for 16 per cent of capital invested in UK tech.
Big players from the Middle East include the Abu Dhabi Investment Authority, which invested in Cinch, and the Qatar Investment Authority, which was involved in UK mega rounds including Starling Bank and Tandem.
The flourishing sector is on track for a second record-breaking year of Asian investment, with 95 deals already in the bag – likely to comfortably surpass last year’s record of 106 deals.
According to Dealroom’s data, the three most attractive sectors for Eastern capital are fintech, software enterprise and health.
Currently, there are 577 startups in the UK backed by Asian investors, including multi-billion dollar unicorns like Checkout.com, listed companies like Farfetch, and fast-growing startups eToro, Deliveroo and Cazoo.
“The UK tech sector is home to the most innovative, most exciting and most globally scalable startups in the world, so it’s no surprise Asian investors are recognising just what a wealth of talent we have here,” said Matt Warman, minister for digital infrastructure.
“It’s also a huge compliment to have a region that has been at the forefront of tech and innovation for decades to believe so strongly in what we’ve built here in the UK and to want to be a part of that,” Warman said.
The data shows the UK has “well-and-truly established itself as the jewel in Europe’s crown for Asian investors,” said Gerard Grech, CEO of Tech Nation.
The soaring regional data comes as UK fintech firms raised $5.7bn (£4.1bn) in the first six months of the year alone, smashing investment records for the sector.
The bumper figure outstrips the total investment secured in the whole of 2020 and is more than a quarter higher than the previous annual record of $4.6bn set in 2019.
The record-breaking cash injection, which came across 317 deals, cemented the UK’s position as the European capital of fintech and highlights growing investor appetite for the sector.