Are Dealroom Really Pushing Back On TechNation 2017 Report – Or Playing Devil’s Advocate?

So as most of you (probably) know, Tech City UK, the government backed organisation led by Gerard Grech, CEO, and Eileen Burbidge, Chair, and responsible for initiatives such as the Future Fifty (promising startups program), HQ-UK (promoting the UK to international startups), and Tech North (yes they have tech in the North!), has recently published its annual Tech Nation report.

You might expect a government backed organisation led by committed start-up evangelists to accentuate the positive, but did the Tech Nation report sex up investment numbers a little too much this year? Dealroom have taken a close look, and this is what they have to say.

TechNation stated that last year, £6.8 billion was invested into UK tech, but Dealroom point out that this figure includes both venture capital…and private equity.

Removing PE, the total value of VC investment into tech startups in 2016, according to Tech Nation, was £2.0 billion – the same as the figure reported in 2015.

The rest of the investment came in the form of private equity buyouts, generally regarded as a secondary investment.

In fact, Dealroom say that according to their data, UK VC deals were worth £2.8 billion last year – less than in 2015 (£3.3bn).

Dealroom also suggest / reveal that European tech companies are rapidly gaining on the UK in terms of the amount of funding they attract.

They say that VC investment is falling in the traditional tech powerhouse countries, Germany and the UK; UK total funding was down €0.68bn to €3.28bn, whilst in Germany the figure fell to €2.08bn from 2015’s €2.98bn.

The ‘bolter’ in 2016 was France – the country pulled in the highest number of VC deals (590) for a total value of €2.78bn – nearly twice 2015’s €1.5bn. Israel (€2.78bn last year from €1.58 the previous) and Sweden (€1.6bn from €1.08bn) also impressed.

Since the beginning of 2017, however, it has been the UK once again that has led the field, and it’s the increasingly trusty Fintech sector that is driving it, thanks to a “long list of sizeable VC rounds”, Dealroom say.

Another sign of health this side of the pond is number of VC backed exits the UK is achieving; €30.9 billion’s worth between 2014-16, notes Dealroom, the most in Europe, with Germany second (€22.8bn) and Finland in third (€9.7bn). Exits are the UKs speciality, although some analysts wish the UK’s entrepreneurs would keep control of their companies just a little longer, rather than selling out to international corporates.

So to conclude, were Tech City UK too quick to heap praise on the UK’s teach sector.

The first thing to say is that VC investment numbers is not the tech equivalent of the Eurovision song contest – as the old saying goes, “what’s good for the goose is good for the gander”.

Want a more straightforward answer – no, Tech City UK aren’t saying anything that is not backed up by the data, or using “creative accounting” to make the UK’s tech sector look bigger and better than it really is.

The UK can be justifiably proud not just of its tech sector but also the support ecosystem which has grown up around it. But then, so can Europe – competition is healthy, but it’s important to remember that it’s not the size of your company (or where it’s based) that’s important – it’s what you do with it ; ))

%d bloggers like this: