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.
Richard Muirhead, general partner at VC firm OpenOcean, said: “London represent! Continuing to demonstrate its strength as the centre for the UK and European tech scene, October’s investment results show encouraging promise for the capital – having recovered slightly from a slower August and September.”
He went on to say the bounce back from September aligns with last week’s announcement that the British economy grew by 0.5% in the three months post-Brexit, despite fears to the contrary.
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.
“A climate of 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, continues to ensure investment into FinTech continues,” said Muirhead.
For those not in the loop, 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.
Muirhead said he expects to see investment into FinTech firms increase as January 2018 (when PSD2 is set to take effect) draws nearer.
He went on to say the rounds announced in October by the likes Funeralbooker, Weengs and Glisser highlight a “desire for simplicity and straightforward consumer facing products”.
A good month
Matthew Bradley, investor at Forward Partners, was positive about October’s investment activity: “Overall, it’s been a good month for our ecosystem – driven by some chunky later stage rounds. Maybe we’d have liked to have seen a bigger post-summer bounce over the last couple of months, but we certainly haven’t been knocked down post-referendum as some had predicted.”
He went on to say it’s great that investors across Europe are collaborating on deals at the early stage, with Weengs being a good example. The shipping solution for small businesses raised £2.2m from investors including UK firms LocalGlobe and Seedcamp alongside Berlin-based Cherry Ventures and Greek VC firm Venture Friends.
“Personally I’m excited with all of the innovation going on. Seeing Monzo deepen its pockets further cements London as a prime FinTech hub and Ravelin’s great early success points to the UK’s ability to compete in the cybersecurity markets,” Bradley added.
He said he’s also “super excited” about Graphcore’s Series A, which featured investment from Bosh, Samsung, Amadeus Capital, C4 Ventures, Draper Espirit, Foundation Capital and Pitango Capital.
“The sale of ARM left a hole and it’s incredibly important that we stay relevant in the processor markets. VR has already stoked fire in the semiconductor markets; a trend that’s set to continue,” he concluded.