It’s been an up-and-down 12 months on the UK tech scene — in a year that saw a change of government, funding continue to fall and tax burdens on businesses increase.
Investors pumped €16.5bn in equity funding into the country’s startups, according to Sifted data, a dip from the $19.4bn (€18.6bn) picked up in 2023 and the lowest figure since 2018, according to comparable Dealroom data.
It’s not been a quiet year on the fundraising front, though. Autonomous vehicle startup Wayve, fintech Abound and neobank Monzo all picked up €300m+ rounds in the biggest raises of the year. VCs were also at it. Balderton raised $1.3bn, Index Ventures picked up $2.3bn and Atomico $1.24bn.
The country also saw its government change hands for the first time in 14 years; a move that many saw as a positive one for the tech sector — though the goodwill towards the government has taken some knocks over the past six months, as business taxes were hiked and tech budgets were cut.
Elsewhere, the UK saw some startups hit huge valuations, became home to Europe’s first femtech unicorn and picked up the region’s biggest AI round of 2024.
Here are the key events that shaped UK tech over the past 12 months.
Government U-turns on angel rules
In January, the government announced sweeping changes to the regulations that dictate who can make angel investments into startups — including raising the minimum annual income from £100k to £170k and net assets from £150k to £430k.
There was a big backlash, as many pointed out that women and ethnic minority angel investors would be disproportionately impacted by those changes.
“We’ll witness a 90% decline in women who could angel invest in Wales on the basis of income, and a 100% fall in the North East of England and Northern Ireland, meaning women no longer qualify at all,” Roxane Sanguinetti and David Fogel of angel community Alma Angels told Sifted at the time.
The campaigning paid off, and in March the government said it wouldn’t, after all, raise income and asset thresholds.
Female founder funding reinstated
Another U-turn followed in September, as government-backed innovation agency Innovate UK reversed its decision to award just half the number of grants it had promised to female founders in a funding competition.
Hundreds of female founders took to social media after just 25 out of a potential 50 grants, of up to £75,000 each, were awarded for the Women in Innovation scheme, despite it receiving 1,452 applications and having “up to £4m” available to grant.
Days later Innovate UK announced on LinkedIn that it would award the full 50 grants, representing a total investment of £4m, “as originally committed”.
Wayve raises $1bn
Autonomous vehicle startup Wayve landed Europe’s biggest round of 2024 — by some distance — when it announced a $1bn raise led by SoftBank and featuring Nvidia and existing backer Microsoft, in May. It’s a record raise for an AI startup in Europe.
Wayve is building software for AVs and said at the time that the fresh funding would be used to develop the startup’s technology and launch its first commercial products to car makers. While it’s been reported that Wayve is in talks with several car manufacturers about partnerships to roll out its tech, the company is yet to announce a commercial deal with one.
In August Wayve announced a partnership with Uber, which saw the ride-hailing giant invest an undisclosed amount in the company and agree to deploy Wayve’s software in its cars in the future.
Graphcore is bought by SoftBank
2024 was the year that the Graphcore saga came to a close.
Following a choppy couple of years at the chip design company — which had seen a landmark deal with Microsoft fall through, layoffs and struggles picking up commercial traction — SoftBank stepped in to acquire the business after months of rumour and speculation.
Sifted scooped the story — along with the news that employees had had the value of their stakes in the company wiped — in July, before the company officially announced the acquisition days later.
Sources told Sifted that only investors with preference shares would receive a payout as the sale price of the company is less than the total amount invested to date (nearly $700m).
It was one of several cases of big name European deeptech startups not living up to once-high expectations.
Femtech Flo becomes Europe’s first femtech unicorn
Period tracking app Flo’s $200m raise turned out to be one of the biggest stories of the year. The Series C round — which saw General Atlantic, previously a backer of the likes of Uber and Klarna, commit all the cash — made headlines for a couple of reasons.
Firstly, it was the joint-biggest raise for a femtech — along with US fertility startup Prelude Fertility — and the biggest ever for a digital-only femtech. Flo also became Europe’s first femtech unicorn as its valuation topped the $1bn mark.
But the raise also sparked a backlash online, with many arguing that Flo’s all-male founding team pointed towards systemic issues in the funding landscape for women founders in Europe.
Revolut gets banking licence
Neobank Revolut finally got its banking licence in July, after three years of back-and-forth with the UK regulator.
The following month it hit an eye-watering $45bn valuation in an employee share sale — an increase from the $33bn it hit after raising an $800m Series D in 2021.
Rise of AI legaltech
One of the hottest AI verticals of 2024 was in the legaltech space — with startups in the UK leading the way.
VCs raced to back a horse in the race as startups moved to outcompete each other by creating AI tools to streamline laborious legal processes like drafting and reviewing documents.
In the past six months alone, Luminance and Lawhive raised $40m, Robin AI picked up $26m, Definely $7m and Wordsmith AI $5m.
Those rounds have attracted some notable names in VC. Revolut’s Nik Storonsky’s family office QuantumLight and founder-led VC firm Plural have backed Robin AI. Notion Capital — which counts unicorns like fintech GoCardless and SaaS platform Paddle among its portfolio — put money behind LegalFly. Index Ventures and General Catalyst invested in Wordsmith AI. Lawhive got backing from Google Ventures and Balderton.
“It’s a race at the moment,” Definely CEO and cofounder Nnamdi Emelifeonwu told Sifted in May. “There will be winners and losers.”
Startup struggled as HMRC asked for tax credit repayment
In August, Sifted reported that UK startups were being told they needed to pay back hundreds of thousands of pounds in R&D tax credits to the UK’s tax agency HMRC, after it decided claims were mistakenly handed out and implemented a number of measures to tackle what it calls high levels of “error and fraud”.
It came two years after startups first told Sifted they were struggling with delays in R&D rebates. “There were delays two years ago but not the level of scrutiny we’ve seen in the last 18 months,” said Adam McCann, cofounder of Claimer, a startup that automates processes for R&D tax advisors.
Anxiety washes over tech sector as Autumn budget approaches
As the autumn rolled around there was only one thing UK founders were talking about: the Budget — and the worries they had about potential rises to capital gains tax and national insurance contributions.
In the weeks leading up to the announcement on October 30, some founders rushed to sell their startups and tax advisors were flooded with enquiries as others mulled overseas relocation amid rising concerns that tax changes could hit the value of an exit.
In the end capital gains tax on the sale of business shares rose — though not as much as people feared — as did national insurance contributions. The reaction from the tech community was divided.
Government tech moves draw mixed reaction
After the Labour party won a landslide election victory in July the tech sector had high hopes. They were dealt a blow when the government announced plans to axe £1.3bn of funding for tech and AI the following month.
The move drew criticism from the UK startup community, with some concerned that it could stop the country’s tech sector competing on a global scale, as well as potentially pushing startups to relocate to more favourable locations, like the US.
There were more positive signs of Labour tech credentials, though. GB Energy — a state-owned company created to increase renewable energy generation — was welcomed by many in the startup sector.
As were UK finance minister Rachel Reeves’ plans to consolidate fragmented pension fund schemes across the country to boost investment into new businesses and critical infrastructure — including VC funds.
Ali Parsa is back
Just over a year on from the collapse of Babylon, founder Ali Parsa jumped back onto the startup scene as his new AI healthtech Quadrivia emerged from stealth.
He sat down for brunch with Sifted a couple of weeks later, to discuss what went wrong at Babylon, the ‘hardest’ period of his career and plans to build a startup that’s bigger than his last.
Read the orginal article: https://sifted.eu/articles/uk-tech-2024/
