There has been an 83% fall in seed-stage investment in UK startups between 23rd March and 17th May 2020 compared to the same period in 2019, according to new research by Plexal and Beauhurst.
Overall UK tech startup funding saw a 50% drop year-on-year during the same period, confirming that, although many startups are struggling to raise funds, seed-stage startups have been the hardest hit.
Andrew Roughan, Managing Director of Plexal, called on the government to do more for first-time founders: “We risk losing a generation of tech entrepreneurs at the earliest stages of their startup journey… By only backing companies that have already raised funds, investors are ignoring the very companies that will define the future success of the British economy.”
Richard Wheeler Associates views the reduction in seed funding as a consequence of investors’ reduced appetite for risk as well as the increased difficulty of building a relationship with entrepreneurs they’ve only been able to meet online. There may also be a reduction in the number of entrepreneurs founding and launching new ventures at this time.
The biggest 5 UK seed-stage deals during lockdown were:
- Eedi $4.3M London EdTech
- Living Optics £3.3M Oxford Imaging Tech
- ContentCal £2.5M London SaaS Content Marketing
- Snoop £3.2M London FinTech
- Primer £3.2M London FinTech
The number of seed-stage deals made now, and the location of these companies, will have an impact on the number of scaleups that are so important for the future of UK tech, as Eileen Burbridge, Chair of the Tech Nation 2020 report says:
“Companies at the pinnacle of growth, scaleups, are becoming an ever more important part of UK tech, with nearly 82% of tech sector investment now being made into these job-generating, value-creating powerhouses of the future."