The post-pandemic economic crisis created perfect conditions forearly-stage companies and investors. World-class tech talent left great tech companies to set up their own businesses – either because they were laid off, or because the rapid growth they had previously enjoyed suddenly disappeared. At the same time, investors didn’t want to make multi-million investments into a high-risk market, so they looked to make smaller, more long-term bets on new companies with big potential.

The result is that whilst overall investment levels in the British and European tech sector is still low, new tech startups have continued to attract investment. And these startups are run by, arguably, the best and most highly qualified founders that we’ve ever seen.

That is why more and more VC firms are looking at early-stage investment opportunities, and why firms such as Antler, which are designed to support founders at the very start of their growth journey, have made more deals than ever before during the downturn.

I joined Antler earlier this year (2024) as a Partner in London. In just six months, we’ve interviewed thousands of founders and worked with those exceptional enough to participate in our founder residencies. I’ve seen first-hand the quality of the new founders that are building startups in London, and I can understand why Antler is set to make a record number of investments in the UK this year.

These are the key insights and trends that I have seen investing in this new generation of British tech founders:

The rise of AI founders, and the race for talent

Every single founder that Antler backs in 2024 is using AI. Founders are applying AI and machine learning to an extraordinary range of industries and sectors to find new and innovative use cases. These range from improving due diligence in private equity to giving advice on home renovations.

That AI doesn’t yet have real world applications is a myth – we’re seeing an extraordinary number of companies disrupting industries and driving productivity and efficiency as a result of this emerging technology. And investors are paying very close attention to the AI startups with the potential to scale.

The consequence of these great AI companies is that the race for AI talent is hotter than ever. The tech startups that define the next ten years will be those that manage to attract the best AI talent. And the European capital of tech will be whichever city – London or elsewhere – that can encourage the best AI talent to build there.

Technical founders are key

We’ve seen nearly a 400% increase in the number of technical founders – people with software development and engineering backgrounds – starting their own companies. This is a big change for Europe, where historically generalist founders and business experts have significantly outnumbered technical founders.

We know that technical founders build the world’s most successful tech founders, and in Antler’s portfolio we’re already seeing startups that have technical founders securing bigger deals at higher valuations than those without them.

Technical founders are attracting the most interest from investors right now, and that will only continue as the AI boom continues.

Talent is everywhere, opportunity is not

Last year there were a record number of startups created in the UK. However, there are still major barriers to becoming an entrepreneur across the country and around the world.

As an early-stage investor, we look for outliers – individuals with the ambition and skills to create companies that are wildly successful. Outliers have a unique way of looking at the world and seeing opportunities that others don’t.

It is very hard to find that outlier mindset if the only people you speak to come from the same small group of elite universities and prestigious companies.

Nearly half of the founders we’ve backed in London say the biggest challenge they faced when starting their company is the uncertainty of an unreliable income. We risk losing out on outstanding founders if they can’t afford to realise their entrepreneurial ambitions.

Investors are increasingly waking up to the fact that diverse thinking creates great companies, and we are starting to see company builders and investors breaking down the barriers to entrepreneurship and giving founders the capital and networks they need to succeed.

Being a founder isn't easy

I was the co-founder of a fintech startup disrupting the world of investing that became a unicorn. I know first-hand that it was incredibly hard work that demanded sacrifices and relentless hard work.

Being a founder is, quite simply, one of the most difficult things you could choose to do. The highs are high, but the lows can be incredibly low, and the best founders learn quickly that they need to do something to incorporate wellbeing into their routines to get through it. Building a startup is a marathon, not a sprint, and founders need to look after themselves to go the distance.

Again, investors are recognising this and we’re seeing VCs offering early-stage companies access to wellbeing and mental health services to help them, but I personally found support through my peers – entrepreneurship is a lonely journey at times, and I used to lean on other founders in my network as I knew they were going through the same challenges and could support in ways others couldn’t. Our approach at Antler recognises the value of this; by running 10-week semi-annual residencies bringing founders together in one space, the support offered by building amongst peers is second-to-none.

The best generation of founders in UK tech

This is one of the most exciting generations of tech founders I’ve ever seen, and I have every confidence that the innovators of the downturn will go on to create tech companies, powered by AI, that will transform industries, drive economic growth and reimagine society. Why? Because I am working with these founders every day and see the scale of what they are trying to achieve.

This article originally appeared in the September/October 2024 issue of Startups Magazine. Click here to subscribe