Our research: British startups have attracted over half a billion in investment since the lockdown began, but deal numbers are down

COVID-19 is having a huge impact on startups and scaleups across the UK, but to understand what’s really going on and provide a window into future trends, we’ve teamed up with research company Beauhurst to analyse UK investment and startup activity. We’ll be tracking nearly 30,000 startups and fast-growth businesses and publishing the stats each week at plexal.com/startup-tracker. We’re also hosting an online event on Tuesday 5 May with Beauhurst to delve into our research and the trends we’re seeing that will affect startups and the tech sector.

Our initial analysis, which looked at figures from Monday 23 March 2020 until Monday 27 April, found that the total value of investment has increased by 34% compared to the same period in 2019. However, there were just 114 deals – this is down by 39% compared to the same period in 2019.

The tech sector has been leading investment activity since the lockdown began, with the highest levels of investment going to startups operating in fintech, artificial intelligence, digital security and blockchain. Of the £663m raised since 23 March 2020, £50.2m went to startups that had never raised funds before.

Nearly 1,000 small businesses are currently in administration (263) or liquidation (707).

The week after lockdown was announced – starting Monday 30 March – saw the lowest weekly amount of investment since w/c 28 March 2016, which was the only week to see less investment in the past five years (excluding Christmas weeks). The value of investments fell by 89% compared to the same week in 2019.

Commenting on the research, Andrew Roughan, our managing director, said: “While the Future Fund is an excellent first start, it’s clear that more is required to protect the businesses that have driven job creation and economic growth in the UK for the last 10 years. This research is designed to cut through the doom and gloom and speculation to see which parts of the startup ecosystem are thriving, and which need urgent support.

“While tech startups have shown remarkable resilience in their ability to continue attracting investment, the success of the few mustn’t overshadow the struggles of the wider majority of British startups.

“If we don’t act now to stimulate the market and ensure funding is distributed widely and quickly, we risk a lost generation of startups and entrepreneurs. We’ll be closely monitoring deal numbers, liquidations and early stage rounds in the coming weeks and months to provide an accurate lens through which to judge whether the support mechanisms are working as desired.”

Henry Whorwood, head of research and consultancy at Beauhurst, added: “While the data shows an immediate downturn following lockdown, our hope is that the startup and technology sectors will remain resilient during this economic disruption. The concern is that a reduction in the number of deals reflects a fall in investor confidence that could cripple the growth of the country’s most successful startups and fast-growth businesses.”

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