October saw 25 UK tech companies announce new funding rounds, totaling $161.2m (£130.2m), according to the Tech City News UK Investment Tracker.
This is significantly higher than the amount announced in September – $70.91m (£53.8m) – representing a 142% increase. The October total was skewed somewhat by the $30m raise by Bristol-based computer chip startup Graphcore.
Some nine of the rounds raised in October were Seed, while four were Venture funding, nine were Series A, one was Series B, one was Series C and a further one was Series D. In comparison, September saw eight Seed rounds, seven Venture, four Series A and one Series B.
The top three rounds of the month were the aforementioned $30m raised by Graphcore, the £21m secured by SME lending platform iwoca and the £18m raised by intelligent packaging solution provider PragmatIC.
Location of companies
All but five of the funding rounds were raised by London companies. Two of the remaining companies – Healx and PragmatIC – are based in Cambridge, with one each also based in Glasgow, Edinburgh and Bristol.
London continues to demonstrate its strength as the centre for the UK and European tech scene and, October’s investment results show encouraging promise for the capital – having recovered slightly from a slower August and September.
The October numbers coupled with last week’s announcement that the British economy grew by 0.5% in the three months post-Brexit, really does offer Investors and Startups a lot more hope that the investment climate in the UK is improving again.
Verticals
There weren’t any strong trends in the type of tech verticals that raised the most funding in October, but three of the companies that raised rounds operate in the FinTech vertical and three are in the recruitment tech space.
One thought is that increasing restlessness felt by traditional retail banks and financial institutions, sparked in part by a looming PSD2 deadline and ongoing cost pressures in investment banking, continue to ensure investment into FinTech will continue.
For those not in the space, PSD2 is the revised EU payments directive which with create more of a level playing field in the payments sphere. It will enable FinTech firms to play a more important role in the space, which is currently dominated by a few incumbent institutions.
We expect to see investment into FinTech firms increase as January 2018 (when PSD2 is set to take effect) draws nearer.
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