The UK tech sector attracted more foreign investment in the first seven months of 2019 than the whole of 2018 according to research prepared for the Digital Economy Council, but greenfield investment into software and IT services is at its lowest level in nine years.
Venture capital investment into the UK tech sector originating from the US and Asia-Pacific investors rose by 147% to $3.7bn from January to July 2019, according to the research undertaken by entrepreneurial network Tech Nation and tech data company Dealroom.
The UK’s secretary of state for digital, culture, media and sport Nicky Morgan hailed the Tech Nation research as a sign of the strength of the UK tech sector and said it is “on course to exceed $11bn worth of investment by the end of the year”.
However, in the first half of 2019 the UK attracted 107 greenfield FDI projects in the software and IT services sector, marking a 46% decrease from the first half of 2018 and the lowest level since the first half of 2010, according to the latest data from greenfield investment monitor fDi Markets.
While this 46% decrease is partially explained by a record 198 greenfield FDI projects announced in the first half of 2018 in the UK software and IT services sector – which encompasses the vast majority of tech firms – this fall was still marginally more than the 43.2% fall in greenfield FDI projects across all sectors in the UK.
London drew in the lion’s share of software and IT services investment, attracting 58.9% of the 107 projects made or announced in the first half of 2019, while Belfast, Leeds and Manchester collectively accounted for just over 12%.
Despite the decline in greenfield investment in the UK software and IT services sector, the UK outperforms all other European countries and Israel at producing highly valued tech companies, finds Tech Nation.
Over the past year, the UK produced 13 new tech unicorns (private companies valued over $1bn), bringing the total number to 72, with London producing 45 unicorns worth $148bn. The only two countries that have seen more new highly valued companies are the US and China.