Venture capital (VC) investment in UK technology companies hit record levels last year despite the pandemic.
Startup accelerator Tech Nation’s latest annual report on the industry found investment reached $15bn (£10.8bn) last year, $200m higher than in 2019.
This places the UK third highest globally, behind the US, which attracted $144.3bn and China which had $44.6bn of investment.
The UK is closing the gap on second place though.
Investment in Chinese tech firms dropped three per cent last year.
The UK hubs driving investment were London, Oxford, Bristol, Cambridge and Edinburgh.
The report did identify some challenges still facing the technology sector.
It highlighted that 63 per cent of the total VC funding for UK tech was from non-European firms.
“While this does reflect the strength and burgeoning international reputation for investment returns in UK tech, it also surfaces the potential for national security concerns, with UK tech firms to become increasingly majority-owned by non-UK actors in the future, while also signifying a shortfall of late stage domestic investors,” the report said.
Much of the investment is coming to London rather than other regions and the UK is also still trailing on research and development (R&D), according to the report, with some private overseas companies investing more in R&D than the UK does as a nation.
Read more: UK tech sector shows its resilience in 2020
“This year has highlighted the UK tech sector’s enormous resilience and world-beating innovative spirit. In the face of a major global crisis, it has not only survived, in many areas, it has boomed,” Gerard Grech, founding chief executive of Tech Nation, said.
“Now the focus turns to the future, as the UK pivots to a wider global role. Developing Britain’s AI-powered deep-tech is especially critical. Much of our future economy will be built on this new technology that leverages machine learning for faster innovation. Bold investment is needed in R&D to boost Britain’s new deep-tech companies and ensure our global competitiveness.”