The United Kingdom stands as the world's sixth largest economy, with its tech startup ecosystem ranking third in funding received in the first quarter of 2024, trailing only the US and China.

To date, the UK tech startup ecosystem has garnered a total of £2.5 billion in the first quarter of 2024 (up to 15 March), representing a 19% decrease from the £3.09 billion secured during the same timeframe in the fourth quarter of 2023 (up to 15 December), and an 18% fall from the £3.06 billion raised in the corresponding period of the first quarter of 2023 (up to 15 March).

Late-stage investments experienced the most significant downturn in the first quarter of 2024. Companies in this stage attracted late-stage funding totalling £1.2 billion up to date, marking a 33% reduction from the £1.8 billion raised in the fourth quarter of 2023 and an 8% decrease from the £1.3 billion secured in the same period of the first quarter of 2023. Early-stage funding amounted to £963 million in the first quarter of 2024, showing a 7% drop from £1 billion raised in the fourth quarter of 2023 and a 24% decline from £1.3 billion raised in the corresponding period last year.

Seed-stage investments, however, saw a 12% increase to £288 million in the first quarter of 2024 from £259 million raised in the same period of the fourth quarter of 2023. This represents a 27% decrease compared to £398 million raised in the same period of the first quarter of 2023.

In the first quarter of 2024, only four companies reported funding rounds exceeding £100 million – Monzo, Flagstone, Mews, and Build a Rocket Boy. Mews emerged as the sole new Unicorn during the quarter, following a Series D round that secured £110 million, valuing the company at £1.2 billion.

The FinTech, Enterprise Applications, and Life Sciences sectors stood out as the top performers in terms of funding within the UK tech ecosystem for the first quarter of 2024. The FinTech sector amassed a total of £1 billion in funding up to date, a decrease of 8% from £1.18 billion raised in the corresponding period of the fourth quarter of 2023, and a 12% fall from £1.24 billion raised in the same period of the first quarter of 2023. The Enterprise Applications sector witnessed a remarkable 90% surge in funding, reaching £950 million up to date, from £500 million raised in the same period of the fourth quarter of 2023.

A modest uptick in exit activities was noted, with 105 acquisitions recorded up to date in the first quarter of 2024, compared to 91 in the same period of the fourth quarter of 2023. Additionally, two companies – AWAKN and Perfect Moment – have gone public so far in the first quarter of 2024, an improvement from the fourth quarter of 2023, which saw no IPOs.

London continues to lead in the funding arena, with startups in the UK's capital raising £1.7 billion up to date in the first quarter of 2024, followed by Edinburgh and Cambridge, which raised £130 million and £108 million, respectively.

Techstars, Mercia, and Scottish Enterprise have been identified as the most active all-time investors in the UK tech sector. Episode 1 Ventures, Hoxton Ventures, and Northstar Ventures were the leading seed-stage investors up to date in the first quarter of 2024, while Notion, Octopus Ventures, and Taiwania Capital were the top early-stage investors. CapitalG, Sprints, and Alignment Growth led the late-stage investment rounds in the first quarter of 2024.

The third quarter of 2020 was recorded as the highest funded quarter in the UK tech startup ecosystem, followed by the first quarter of 2022, after which funding has trended downwards. Despite facing challenges, the UK remains a key player in the global tech startup landscape. The UK government has announced a £1.5 million investment in a marketing campaign to bolster the nation's science and technology sector, along with other initiatives aimed at stimulating industry growth.