Yahoo Finance The four fintech unicorns the UK created in 2024
Capital-hungry tech companies have suffered under high capital costs in 2023 due to sticky interest rates, data security threats and reduced investment.
At £14.58bn, total funding remains higher than in both 2019 and 2020, but far below levels seen over the last two years. Funding for UK tech hit a high of £32.48bn in 2021.
The reduction is funding can be attributed to “high-interest rates, geopolitical tension and increased energy prices due to the Russia-Ukraine War,” according to SaaS-based market intelligence platform Tracxn.
Fintech in particular has had a tough year.
Fintech investment dropped to £2.61bn, down 72 per cent year on year from £9.27bn, as investors moved towards green energy start-ups and AI.
Start-ups in the energy sector raised £2.38bn in the first nine months of the year, the most venture capital cash by sector, according to data from Dealroom and HSBC Innovation Banking. The sector is on track to raise roughly the same amount by year-end as they did in 2022, impressive in a year marked by reduced investment and confidence.
The only sector to see a rise in funding was the Aerospace, Maritime & Defense Tech segment, where funding rose by 12.5 per cent to £181.28mn, according to Tracxn.
However, generative AI has been the success story of 2023, with huge companies like OpenAI booming alongside smaller start-ups like StabilityAI, Pathway and Penelope.
The UK produced four unicorns in 2023, two of which were AI start-ups.
Quantexa, an AI data analytics start-up focused on the banking sector, has a £1.42bn valuations and £292.90mn in funding. Synthesia, a generative AI firm, was similarly minted as a unicorn in June, with a post-money valuation of $1bn.
Castore, a tech-enabled sportswear brand backed by Andy Murray, and TapTap Send, an app that lets immigrants cheaply send money back home, both also achieved unicorn status in 2023.
However, the UK Tech sector saw only 22 funding rounds of £79.16and above in 2023, down by 62.5 per cent from 2022.
The biggest funding round in 2023 was for Zenobe energy, an EV battery scale-up, which raised £870m in September.
Conigital, an Autonomous vehicle company, raised £400m in September and dog food company Butternut raised £180m in the same month.
Fintech Abound, OVO Energy and AI SaaS platform Builder all raised more than £150m in 2023.
Other successful start-ups this year have been digital bank Kroo, which hopes to rival Starling, mental wellbeing app Unmind and Internet and networking hardware firm Netomania.
Unmind has raised £50.03mn in funding this year, while Netomania has raised its total funds to £174mn.
On a less positive note, two big crises in the tech sector this sector this year were Babylon Health and Silicon Valley Bank.
Bablyon Health filed for bankruptcy in August and sold its UK telemedicine service for around £500,000 – it was once worth £1.58bn – after regulatory issues led to the loss of major contracts in the UK and cash flows dried up.
Silicon Valley Bank, the start-up bank of start-ups, was sold to HSBC for £1 after a bank run in the wake of poor management and lack of investor confidence.
Despite the tech sector’s struggles in 2023, analysts are hopeful that 2024 will bring positive changes as economic indicators start to look up and developments in AI and climate tech bring new opportunities across the sector.
