The startup and investor community shouldn’t be too concerned by a year-over-year decline in funding, according to British Patient Capital’s investment managing director.
Speaking to UKTN, Ian Connatty, an investment executive at British Patient Capital, part of the state-owned British Business Bank, said that “stats are not going to rise to the sky every year”.
Tech funding in the UK took a hit last year. A report from Atomico found VC funding in the UK fell by 54% from 2022, causing the alarm bells to ring for some.
“At some point [stats] have to come down,” Connatty said. “The numbers are what they are.”
Connatty pointed out that, as the name might suggest, British Patient Capital takes a “longer-term lens” with companies often spending “10 plus years” in a portfolio.
The investor added that looking at the “historical trend” of tech investment, “the back end of 2020, 2021 and the first part of 2022 were the outliers”.
Investment soared during those years amid record-low interest rates. Once central banks around the world raised interest rates, the flow of capital into startups, deemed riskier bets compared to other investment classes, slowed down.
Looking at levels for 2023, the UK remained the most funded tech industry in Europe, and its investment performance across a wider time frame was relatively high.
Connatty acknowledged that the common narrative that macroeconomic conditions have forced investor caution is true. However, for him, there is still plenty of opportunity out there for investors.
Referring to AI, he said that “at this stage, exactly what the winner use cases are going to be and how it will play out, remains to be seen”.
He said that “as a new paradigm in technology, [AI is] certainly garnering a lot of interest”, even as financial caution is being encouraged.
“On that front,” he said, “it doesn’t feel like there’s less willingness to look at things that are speculative.”
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