Despite London Tech Week commencing with recent news that the UK capital has overtaken San Francisco as the global fintech hub, late-stage tech funding appears to be experiencing a significant slowdown compared to other countries. As a result, several prominent figures from the tech industry have expressed concerns and disappointment in relation to available support in the UK ecosystem for aspiring founders. In light of this, Claire Trachet, tech industry expert, and CEO and founder of business advisory, Trachet, comments on the need for support in the UK’s tech industry to ensure its attractiveness remains.

According to a report by PitchBook, the opening quarter of 2023 saw VC funding in the UK fall to £2.9 billion. This decrease can be attributed to VCs pausing their investments to readjust their deployment rates due to several macroeconomic challenges. While the slowdown is not limited to the UK, countries such as France and Germany appear to be distributing large amounts of public money into their tech sectors. Since 2016, French investment bank, BPIfrance has allocated €7.2 billion into French tech firms. Similarly, Germany has created plans to invest €10 billion in startups by 2030, while also encouraging more pension funds to invest in VC.

In comparison, the UK government has faced criticism for its investment into the tech sector being significantly smaller. Despite this, data from DealRoom shows that the UK’s tech industry is projected to reach a value of $2.6 trillion over the next decade based on its current trajectory, and with increased support, research finds that the industry could quadruple in value to $4 trillion. In the coming year, a report by Tech Nation suggests UK tech startups and scaleups will be valued at over $1.3 trillion, a significant increase from $53.6 billion ten years ago. This suggests that while the UK currently remains a key place for tech, it needs to be made a priority to ensure the country can retain its place as a global contender in the tech race.

Claire Trachet (CEO/Founder) comments on the need for support in the UK’s tech industry to ensure its attractiveness remains:

“I’ve always felt very positive about the UK remaining a central place for tech, however, a lot needs to be done currently to ensure it retains this spot. It needs to be properly cared about and not taken for granted. That means that investment needs to be distributed into the tech system. It’s quite surprising, traditionally the UK is seen as pro innovation and investment, and now we’re seeing that there are other European countries like France and Germany who are taking a greater role in distributing investment into this area.

“I think another thing that needs to be taken into account is the difficulties surrounding hiring. It’s a much longer process in terms of obtaining a visa now in the post-Brexit world. For someone starting a business, it makes things not only quite complicated but also expensive. Also, with a combined population of nearly 750m people, naturally, companies may be viewing that as a much bigger talent pool than in the UK.

“This makes it even more crucial for the government to be actively pushing investment into the tech industry. These problems may not seem to have a big impact right now, but if the industry is neglected and taken for granted, there could be more severe consequences down the line. Amidst this tech race, now is the time to act to ensure the UK remains the attractive investment and growth destination that it has traditionally been.”