Venture capital funding raised by UK startups dropped sharply in the third quarter of 2024, new research has found, adding further pressure for founders in search of new investment.
British startups secured around $2.9bn in VC funding in Q3, a 50% drop from the previous quarter, according to the latest report from HSBC Innovation Banking and Dealroom.
According to the data, the third quarter of 2024 saw the smallest amount of startup investment in the UK in the past five years.
But the funding trend is broadly consistent with levels seen in 2023.
Fintech on top
Fintech has been Britain’s best-funded tech sector so far this year, pulling in $3.3bn, down from $4.5bn in 2023.
The UK fintech sector is back,” declared Remus Brett, general partner at LocalGlobe.
“Many scaleups, having emerged from a challenging funding market stronger than ever, are making a serious dent in incumbentsʼ market share.”
Top fintech funding rounds so far this year include Monzo’s £340m investment in March, which was later extended to $610m.
A small handful of megarounds in the health tech sector, including Flo Health’s £156m Series C and Myricx Bio’s £90m Series A, propelled it to second place, with $2.3bn so far raised.
Simon Bumfrey, head of technology and life sciences at HSBC Innovation Banking UK said the group expected this trend to continue as domestic and international investors are both showing a keen interest in the sector.
Bumfrey said investors see significant “opportunity” in the “UK innovation ecosystem”, prompting a “buoyant outlook for 2025 and beyond”.
The report also found that the share of VC funding raised by British startups coming from overseas in 2024 is, so far, one of the highest seen in the past decade.
Around 70% of VC investments in the UK came from abroad, the third highest in the last 10 years after 2019 and 2021.
The UK has held its place as the best-funded startup ecosystem in Europe, with $12.4bn so far, almost Germany and France, which have raised $6.7bn and $6.5bn respectively in 2024.