Research suggests that as much as £13.7 billion in funding was secured for UK start-ups in the first half of 2021 – almost double the £6.9 billion raised in the second half of 2020.
Moreover, these figures represent a huge spike in funding over the last five years. In 2018, start-ups raised just £7 billion in the entire year amid Brexit fears – a 15% drop on the £8.3 million secured in the year before.
With London now ranked fourth for tech VC funding behind San Francisco, Beijing, and New York, there’s no doubt that this is an environment in which innovative and disruptive start-ups can flourish. But who has been getting all the money? And where has it been coming from? Read on to find out.
Where is the money coming from?
According to Institute of Directors figures from the last five years, some 82% of start-up founders actually decide to self-fund.
However, only 56% of them use self-funding as their only source – meaning that the remaining 44% have to look elsewhere for their funding.
While investment from friends, families, and traditional lenders is common for this remaining segment, more and more start-ups are turning to alternative finance via lenders such as Nucleus, iwoca, or Ultimate Finance.
Alternative lenders often provide a more customised, bespoke approach to funding, offering agility, efficiency, and accessibility above all else.
Who is leading the way?
The short answer? Tech start-ups in London. According to TechCrunch, the most profitable start-up sectors are ecommerce, SaaS, mobile, and Chrome extensions.
This is backed up by FT figures showing that five of the top 10 UK funding rounds in the first half of 2021 came from fintech businesses. Firms included Starling, Blockchain, SaltPay, Rapyd, and Checkout.com.
The remainder came from a range of different industries. Take a look:
- Cinch (£1.02 billion): Cinch is an industry-leading used car marketplace, with a range of tools. It raised the most funding in the first half of 2021, leading by a gap of over £500 million on CMR Surgical in second place.
- CMR Surgical (£436 million): CMR Surgical is a medical tech company that develops surgical robots. In the first half of 2021, it raised more than $600 million in Series D funding.
- SaltPay (£347 million): SaltPay is a payments provider for merchants, with ePOS, loyalty scheme and a range of other functionalities to support small retailers.
- Checkout.com (£327 million): Checkout is another payments start-up, with a focus on creating “seamless customer experiences”.
- Starling (£322 million): The last of the three fintech firms in the top five, Starling is an award-winning challenger bank.
- Hopin (£290 million): An events management platform allowing firms to integrate virtual and in-person events, following the huge surge in webinars and online conferences during the pandemic.
- Bought By Many (£254 million): A premium pet insurance provider based in London.
- Snyk (£218 million): A cybersecurity tool that helps developers find and plug vulnerabilities in their tech.
- Blockchain (£218 million): A cryptocurrency platform with more than $800 billion in transactions since 2021.
- Rapyd (£218 million): A global fintech designing the world’s “leading global payments network”.
Based on these figures, it’s clear that this is a prosperous time for UK start-ups looking for funding. The amount raised has almost doubled in the past six months, showing that the landscape for investment remains healthy.
Looking for funding? Contact our team at Funding Bay – we work with a range of lenders who will be able to get your business what it needs.
