Boom in UK tech investment from Asia, Middle East

Investment this year in UK tech startups from Asia and the Middle East appears on course to reach a new high, according to a new report.

David Sapsted

20 July 2021

The amount invested over the first half of the year almost equalled the amount raised during the whole of 2020, according to research by Dealroom.co for the UK's Digital Economy Council.By the end of June, the report said, Asian and Middle Eastern investors had poured more than £1.7 billion into British tech companies, representing 13.2 per cent of total inward investments in the country.So far this year, Asian capital has backed 95 tech deals in the UK. Over the whole of 2020, the total was 106. But it was not just a one-way street. "The strong flow of investment from East to West is complemented by similar flows the other way, with leading UK-based venture capital firms increasingly investing in startups in Southeast Asia in particular," said the report.The Asian nation investing most heavily in UK tech remained Japan, although Dealroom said the country's dominance had weakened over the past five years as other regional players - including Singapore, Hong Kong, Malaysia and China - increased their investment activity in the UK.Gerard Grech, CEO of Tech Nation - a government-backed consultancy for tech entrepreneurs in the UK - said: “With the release of this data, it’s clear that the UK has well and truly established itself as the jewel in Europe’s crown for Asian investors.

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"UK entrepreneurs are creating startups and scale-ups that are consistently, year-on-year, attracting investment from the likes of Softbank (Japan), GIC (Singapore) and DST Global (Hong Kong). With such heavyweight investors, UK tech companies really can have global reach.”The report said that significant Middle East investors so far this year included the Abu Dhabi Investment Authority, which invested in Cinch, and the Qatar Investment Authority, which was involved in UK 'mega-rounds' including Starling Bank and Tandem.Dealroom calculated that, by the end of last month, there were 577 UK startups with Asian investors, including unicorns with a multi-billion dollar valuation such as Checkout.com, and listed tech companies such as Farfetch.

As for venture capital going from West to East, UK-based institutions have already matched this year the £720 million invested in Asian startups across the whole of 2020.Commenting on the report, the UK's Minister for Digital Infrastructure Matt Warman, said: “The UK tech sector is home to the most innovative, most exciting and most globally scalable startups in the world, so it’s no surprise Asian investors are recognising just what a wealth of talent we have here."It’s also a huge compliment to have a region that has been at the forefront of tech and innovation for decades to believe so strongly in what we’ve built here in the UK and to want to be a part of that.”