A new study of the UK’s investment landscape has found that Edinburgh-based businesses secured the third most funding rounds in 2024, although it suffered from a decline compared to last year following turbulent markets and a dip in investor confidence.

Sharetech platform Vestd published the findings in its Global Investment Report 2024, which shows Edinburgh coming after only London and Manchester in the number of total funding rounds across the first three quarters of the year.

By analysing Crunchbase data, Vestd found that Edinburgh businesses secured 65 funding rounds between Q1 and Q3 of 2024, representing a 17% drop compared to the same timeframe in 2023, coming only slightly behind Manchester with 74 funding rounds.

Both cities, however, pale in comparison to London, which enjoyed 1,230 funding rounds, although still a 30.4% decline from the 1,767 across the same period in 2023.

Rounding out the top five UK cities for total funding rounds were Bristol (50), and Glasgow (45), though as across the country, both cities declined on their performance from last year.

In fact, Liverpool was alone among the cities making up the top ten in improving on last year’s figures, showing a 70.6% rise in funding rounds, far outpacing its 2023 total funding activity.   

According to Vestd, one reason for this might be Liverpool’s major redevelopment in recent years to increase its business viability, including the launch of Liverpool City Region Life Sciences.

Looking across the UK, the data shows that 468,000 new companies were launched, bringing the total number of companies operating in the UK to 5.47 million, however investment in early-stage businesses has fallen, with funding rounds down by over 28%, showing just 2,369 total funding rounds for the year to date compared to the 3,314 recorded last year. 

While across the UK Q1 of 2024 saw a promising start with 901 total funding rounds, this had since declined by 26.3% by the end of Q3.

Interestingly, despite the hype surrounding AI development, total funding rounds globally in the AI sector also declined slightly since last year, reaching 3,826 compared to the 4,626 across the same period in 2023. 

Despite this, the sector continues to account for a significant share of investment, as generative AI experienced an 18% rise in investments in 2024, intelligent systems had a 22.4% jump in investment, and Robotic Process Automation (RPA) observed an 86.4% increase in funding rounds.

In other emerging technologies, the research revealed a 300% spike in Initial Coin Offerings (ICOs), reflecting a renewed interest in blockchain and crypto-related projects.

Vestd said that while this remains a niche funding type, the surge in interest may allude to the increasing range of opportunities that are emerging in tech sectors.

Recommended reading

• Transport Trackers Are a ‘Go’ In Edinburgh
• Latest Cohort of Edinburgh Uni’s AI Accelerator Announced
• Edinburgh Among World’s ‘Most Investable’ Cities

“As funding struggles to regain momentum following broader market uncertainties, investors have become more selective, leading to many sectors observing a downward trend in funding, with early-stage funding hardest hit,” said Ifty Nasir, CEO of Vestd.

“This shift in the investment market presents a unique opportunity for founders to refine their value propositions and become resilient in demonstrating their growth potential and market fit. 

“Increasingly, investors are focused on businesses that not only present a clear path to profitability but also align with key market drivers like operational efficiency and innovation. The ongoing surge in investment in sectors such as artificial intelligence represents the wider global trend towards digital transformation.”