Investors are continuing to back companies across the UK technology sector despite the challenges posed by the Covid-19 pandemic, according to a new report.
London continues to dominate in regard to investment, with companies based in the capital raising $4 billion since the start of January – more than Paris, Berlin, Stockholm and Tel Aviv combined.
In particular, fintech dominates fundraising in the UK’s capital, accounting for more than one-third (39%) of 2020 fundraising.
Going into the coronavirus crisis in February this year, the UK technology sector was in a strong position, and from January to the end of May tech companies raised $5.3 billion compared to $4.1 billion across the rest of Europe.
However, the report warns that many deals were agreed in principle before the onset of the outbreak and expectations have been subsequently reset.
Capital inflows in the second half of this year are unlikely to be as strong as those in 2019, the report says.
Recent data gathered from more than 200 companies for the venture capital community also shows that one-third of companies have slowed hiring, while almost half have frozen hiring entirely.
Concerningly, around 39% of business-to-consumer companies saw their revenues drop by more than 50% in March and two-fifths said they believe they have less than 12-months of funds available.
In April, the UK Government unveiled the Future Fund, which offered £250 million of matched funding for startups. In the first 12 days of the scheme, some 464 applications were received from companies across the country.
Gerard Grech, chief executive of Tech Nation, said the UK technology sector is more than capable of weathering the Covid-19 storm and exiting the crisis in a stronger position.
“Many businesses are adapting and innovating to support the fight against coronavirus, demonstrating the resilience and resourcefulness of the UK tech sector.
“Although we are seeing many tech companies closing key rounds of funding, the picture is being monitored closely at Tech Nation, especially across different parts of the country, where access to finance may not be as strong,” he said.
“These findings today confirm that the UK is well-positioned to face the challenges that lie ahead and leave Covid-19 in a position of strength,” Grech added.
Scotland weathering the storm
Across the UK, smaller tech ecosystems are continuing to weather the storm and attract investment. In particular, the report highlights the resilience of Scotland’s tech startup ecosystem, which also continues to attract investment and perform well.
Last year, Edinburgh advertised 35,786 digital tech roles, making up over 22% of jobs in the region and underlining the strength of the capital within Scotland’s economy.
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Edinburgh had the highest median salary for digital technology jobs in the UK at £44,938. This is 17% higher than the median salary across all sectors in the city in 2019, the report shows.
In Glasgow, Scotland’s largest city, more than 33,378 digital tech roles were advertised, which accounted for 22% of jobs in the city. Tech employees in the city can expect a lower median salary of £40,000 compared to their Edinburgh counterparts. This, however, is 35% higher than the median salary across all sectors in the city in 2019.