London less attractive to foreign tech investment – AbellMoney

London less attractive to foreign tech investment

By Timothy Adler on Growth Business – Your gateway to entrepreneurial success

Foreign investment in UK tech projects fell in 2022, with the number of UK tech projects funded from overseas dropping by 23 per cent year on year.

The number of UK technology projects involving foreign tech investment fell to 234 last year, according to professional services firm EY.

Although Britain remains the biggest destination for overseas investment in the tech sector in Europe, it now has a smaller share of the overall market at 20 per cent, down from 29 per cent in 2021.

VC investment in UK companies falls by a third – Venture capital investment into UK businesses falls by one third in final quarter of 2022, seeing the lowest level of investment since Q2 2020

That said, Britain has hung on to its number-one position for tech investment for the past five years.

This is because software and IT services were the biggest category for foreign investment in 2022, with foreign direct investment (FDI) up 8 per cent – double the rate of growth in 2021 – accounting for 20 per cent of all FDI-backed projects.

Looking beyond the tech sector, the total number of projects involving FDI in Britain dropped by 6 per cent (929).

Julie Teigland, EY EMEIA area managing partner, said that the UK has been impacted by concerns about trade restrictions and labour shortages.

Most active venture capital firms revealed – There were 2,722 equity rounds in 2022 – down 7 per cent on 2021 but higher than years prior

However, FDI into Europe was flat in 2022, rising only 1 per cent compared with 2021, and remains 7 per cent lower than in 2019, just before the Covid pandemic hit.

Despite hopes that FDI into Europe would bounce back in 2021 post-Covid, the aftershocks of the war in Ukraine, weak economic growth, supply chain disruption, rising inflation and soaring energy costs all contributed to stalled foreign investment into Europe.

A C-suite survey conducted as part of EY’s research found that 29 per cent of European businesses have postponed planned investments as a direct result of the energy crisis.

Further reading

UK tech could be worth $4 trillion within decade – Tech Nation says that UK technology companies will be worth $2.6tr if they keep on current trajectory but could hit $4 trillion with Government and investor support
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