Start-up businesses in the UK have raised more than $30 billion (over £21 billion) this year, more than twice the amount raised in 2020. Funding rounds by the likes of Hopin (a client of ours) and Revolut, now Britain's most valuable startup, have contributed to a large chunk of the capital raised. The rise in capital being invested from overseas into the UK should provide many startup founders and business leaders, especially in industries such as banking, healthcare and energy, confidence to scale and grow.
Seven UK tech companies reached a valuation of $10 billion this year, meaning Britain is home to ten private technology companies to reach such a value. On top of this, $11.2 billion has been raised by financial tech companies, a staggering amount in comparison to the $5 billion raised in 2020. Many young UK companies are benefiting from the mass influx of funding, including healthcare technology ($2.5 billion) and private enterprise software businesses such as Hopin receiving upwards of $450 million in fresh funds in 2021 alone.
Jas Bhogal, partner in our corporate team comments:
'The promise of Global Britain seems to be coming to fruition. We have an amazing set of circumstances that are clearly attracting overseas investment in start-up and scale-up businesses right now.
'Anything that the Chancellor can do to assist this being the case in next week’s Budget is clearly something that business owners and investors will welcome.
'It’s easy to look at the ten UK tech private businesses that are now valued at over $10bn and wonder how they got there. The trick is that they had a plan and knew how to use funding – both domestic and overseas – to achieve it.
'We’re always proud to see businesses we’ve advised doing well and this kind of coverage is really inspiring for any business owner who has a dream and a plan.
'It is crucial that the company is ‘groomed’ for investment i.e. has all of its ducks in a row in respect of its corporate structure.'
What can startups do to maximise their investment opportunities?
Understanding how funding will impact your business in the future, whether it’s family and friends providing hands-off pre-seed funding, or you’re looking to partner with an investor who’s experienced in your sector is key.
- Understand how funding will impact your business in the future considering the many investment options available.
- Complete the necessary steps to secure funding (company valuation, creating capitalisation tables, business plans and meet regulatory or investor requirements).
- Consider tax-advantaged schemes such as Enterprise Investment Schemes and Seed Enterprise Investment Schemes.
- Complete necessary due diligence for a fundraise and deal with issues raised by potential investors.
- Resolve issues around intellectual property rights and business disputes.
- Clearly define any third-party involvement. Everything should be clearly documented and any outstanding obligations settled in a proper way.
Supporting start-ups is what we specialise in at Harper James. We understand the pressures and challenges you could face as you unlock your company’s growth potential. We advise hundreds of clients from start up to exit and assist them with their investment rounds along the way. We can assist the company’s and the founders to manage and allocate the risk of the investment between the parties as appropriate.