New data published in Atomico’s The State of European Tech 2023 report has revealed that the UK has lost the largest share of venture capital (VC) funding invested by country over the last three years.
According to the report, VC funding in the UK from 2021-2023 fell by 2.6% on its share from 2018-2020. Year-on-year, funding fell by 54%, a much steeper fall than the average across Europe, which stands at 45%.
CEO/Founder of the leading business advisory Trachet – Claire Trachet – discusses the lessons that the UK must learn from its European neighbours if it wishes to continue being a leader in terms of VC funding.
Atomico’s report found that the success stories of 2023 were namely The Netherlands, Norway and Estonia, with each country seeing an increase of 1.7%, 0.9% and 0.7% respectively.
This has been despite an overall decline in VC funding across the globe as rising interest rates and restrictive macroeconomic conditions forced many investors to retreat from the start-up scene.
The area that’s picked up the most interest among investors has been that of artificial intelligence, with AI-focused businesses accounting for 11% of fundraising rounds at their seed stage. Across the continent, a staggering 11 AI start-ups, including Aleph Alpha and Mistral, raised “mega-rounds” of over $100m.
According to Claire Trachet, AI is one area of the start-up scene that the UK must nurture and support if it wants to get ahead of European competitors.
Whilst the EU have led the field, with its legislation on AI to come into force before the end of the year, the UK have continued to refrain from regulating its own AI sector with critics claiming that this lasseiz-faire approach may deter investors that seek transparency and security.
Claire Trachet, CEO/Founder of Trachet said, “Atomico’s latest report should come as a wake-up call to policymakers looking to regain the confidence of investors in the UK’s start-up scene. As the AI sector continues to the develop, it’s paramount that UK legislators follow in the footsteps of their European neighbours and look towards a collaborative approach towards regulating the sector.
“This will have the dual benefit of promoting safety and confidence in the sector amongst consumers, whilst also encouraging international investors that seek transparency and security amid a difficult macroeconomic climate.
“The government’s announcement of a £500m fundingpackage for UK AI in last week’s Autumn Statement provides an admirable start in building confidence in the sector. Enabling tech firms to bring cutting-edge products to market faster will ensure that Britain doesn’t lose its spot as a leader in Europe for this sector.
“Following on from the success of supercomputing centres in Edinburgh and Bristol, the government are doubling down on their ambition to make the UK an AI powerhouse”.