Venture capital (VC) funding in the UK has dropped for the third consecutive quarter, with minimal rounds taking place for later-stage companies, new data has shown.
VCs invested £2.4bn into UK tech firms in the first quarter of the year, according to the European Venture Report from PitchBook. This is a 25% drop from the last quarter of 2023, which itself was a 37% drop from the third quarter’s £5.1bn.
The report also showed that apart from the third quarter of 2023, VC funding into UK startups has dropped every quarter since the start of 2022. The decline in investment levels has been attributed to rising interest rates and macroeconomic pressures.
Despite the continued decline in VC funding from the outlier years of 2021 and 2022, it remains on par with 2020 levels, suggesting a degree of stabilisation.
The PitchBook data noted that early-stage funding rounds were by far the most represented in the first quarter of 2024, with over half (52%) of the 205 deals tracked in the report being at the seed stage.
Series B rounds and rounds from Series D and higher made up less than 2% of UK VC funding deals and Series C rounds made up just 3%, suggesting a lack of availability of funding for later-stage companies.
Separate funding data published by Dealroom and HSBC Innovation Banking this week revealed that fintech has returned to the top of UK tech’s most funded sector. This was in part down to a mega round for digital bank Monzo, which raised £340m in March.
According to PitchBook, Monzo’s March round was the largest of any individual VC equity deal in Europe last quarter, though Swedish sustainable steel company H2 Green Steel raised more when including €4.2bn (£3.6bn) of debt financing secured in January.
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