The number of venture capital (VC) deals for UK startups has dropped by 38.1% year-on-year while the corresponding funding value has plummeted by a massive 70.1% during the first two months of 2023.
These figures indicate a challenging start to the year for the UK startup scene, which has been hit hard by economic uncertainty and volatile geopolitical issues, says GlobalData.
An analysis of GlobalData’s Financial Deals Database reveals that a total of 203 VC funding deals were announced in the UK during the first two months of 2023 while the disclosed funding value of these deals stood at $2 billion.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The decline is in line with the trend witnessed in other key global markets wherein VC funding activity suffered a setback both in terms of volume as well as value but the impact was more prominent in value terms.”
For instance, the US, China and India saw VC funding deal volume fall by 52.1%, 29.1% and 56.3%, respectively, during January-February 2023 compared to the same period in previous year while the decline in terms of value in these markets stood much higher at 72.3%, 52.2% and 80.8%, respectively.
However, despite the decline, the UK continues to be the top European market for VC funding activity and ranks among the top five markets globally in terms of both deal volume and value.
Bose concludes: “The prevailing geopolitical conditions coupled with the macroeconomic challenges seem to be taking a toll on the UK’s startup ecosystem as VC investors are becoming increasingly cautious. As a result, it is crucial for UK startups to continue to demonstrate their potential for growth, profitability, and innovation to attract investment in this challenging environment.”