It seems that misfortune and sadness were the order of the day in 2016, the emerging data offering a gust of nails in the long-awaited coffin of the year. And the technology industry was not exempt; Making up the miserable year comes the news that British startups have suffered a drastic drop in funding throughout 2016.
Data from Beauhurst, a fast-growing business in the UK, shows that total investment in UK start-ups fell 12% to £ 4.1 billion in 2016. Meanwhile, Deals figures fell 18% to 1,460 last year. The figures represent the first annual decline in initial investment since the beginning of recordings in 2010. And while business was somewhat slow even in 2015, last year’s statistics show what Beauhurst considers «a dramatic interruption in years of investment.» Growth ”and a“ worrying trend in the short and medium term. «
In an unexpected turn of events, it seems that everyone’s favorite scapegoat, Brexit, cannot be blamed alone. While the divisive decision may be partly responsible for a general slowdown, the busiest month for investment was in fact September, a few months after Britain voted to sever ties with the EU. Unfortunately, it seems that we cannot afford even a catharsis attack that criticizes Brexit.
However, not all of it was bad news. Crowdfunding plays an increasingly dominant role in the world of start-up financing, providing an alternative way for companies to raise capital. Beaufort believes that crowdfunding «appears as a real alternative to financing companies at a later stage», indicating that it is not just start-ups that are looking for alternative means of financing.
Overall, the total number of crowdfunding campaigns decreased by 14% compared to 2015, but Crowdcube, one of the largest crowdfunding platforms in the UK, assured everyone of the dynamism of the industry, reporting a 20% increase in investment in the six months since Brexit.
Despite the grim figures, Marketing Director Luke Lang was positively jubilant, saying in a statement: «As the government addresses the economic and political impact of the decision to leave the EU, we believe that British companies will become more attractive to investors now.» especially with the country’s reputation as a center of excellence for fintech and other highly disruptive startups. «
So don’t expect the rolling grass to still run through UK technology centers (except, ironically, at where astronomical rent is forcing startups to move elsewhere ). One area that is showing incredible growth is the life sciences industry, with Beauhurst revealing an impressive 19% increase in funding at an early stage, to GBP 202 million. Meanwhile, major league transactions are still taking place: Deliveroo received a £ 210m investment in August, followed by Skyscanner, which raised £ 128m in a deal.
So before you decide to hide under cover for the rest of 2017, remember that there is still hope. Especially for the notoriously large demographics of people working in collectively funded life science startups. Hmm …