New data indicates a downturn in the UK’s startup funding environment, particularly affecting late-stage investments which saw a significant decline.
Research firm Tracxn’s latest quarterly tech industry report highlights a 19% decrease in funding for British startups during the first quarter of 2024, totaling $2.5bn, down from $3.09bn in the preceding quarter at the end of 2023.
This downturn not only marks a notable decline from the previous quarter but also signifies an 18% drop compared to the first quarter of 2023, underscoring the continuing challenges within the tech funding landscape.
The reduction in funding was particularly acute for late-stage startups, which experienced a 33% decrease in investment compared to the final quarter of 2023. Conversely, early-stage funding saw a more modest reduction of 7% from the end of last year, though it was still 24% lower than the figures reported at the beginning of 2023.
However, there was a silver lining in the form of seed investments, which actually increased by 12% compared to the end of the last year, despite being 27% lower than at the start of 2023, amounting to $288m in the UK.
Among the noteworthy funding rounds in the early part of the year were Monzo’s £340m fundraise in February and Flagstone’s £108m investment in March. Despite the overall funding slowdown, the UK managed to maintain its position as the third most funded tech industry globally, trailing only behind China and the US.
This reshuffle of the original information provides a fresh perspective on the current state of startup funding in the UK, highlighting the challenges faced by later-stage startups in securing investments, while also noting areas of growth within seed-stage funding amidst a broader slowdown in the tech sector.
