Crowdfunding: UK Startup Funding Declines After Brexit

The previous year saw investment in UK start-ups and high-rise private establishments fall. Is Brexit the one to blame for this sharp decline?

A record obtained from Beauhurst, a firm that examines the fast-growing companies in Britain, discloses the fact that the overall investment in UK startups fell 12% to £4.1 billion in the previous year. Deal statistics fell by 18% to 1,460 last year. The data represent the first annual decline in startup investment since 2010 when the figures were first recorded.

In an unpredicted whirl of events, it seems the fault can’t be lumped only on Brexit. Though the divisive resolve may be partly responsible for an overall dwindle, the most demanding month for investment was actually September, several months after Britain voted to cut ties with the EU.

Despite all the negativity, here’s good news — crowdfunding is becoming more and more dominant in the world of early stage financing, offering another option for businesses to raise capital. Beaufort believes that crowdfunding is “emerging as a real alternative for funding later-stage companies”, signifying that it’s not only startups finding alternative ways of funding.

All in all, the number of crowdfunding campaigns declined by 14% as compared to the total figure in 2015. But one of the UK’s largest crowdfunding platforms, Crowdcube, reported that there will be a 20% investment increase six months after Brexit.

In the face of the depressing figures, CMO Luke Lang remains positive, stating: “While the Government tackles the economic and political outfall of the decision to leave the EU, we believe British businesses are becoming more attractive to investors right now, particularly with the country’s reputation as a centre of excellence for fintech and other highly disruptive startups.”

Hence, there’s still hope despite seeing a drastic fall in the UK’s startup funding. One part showing far-fetched growth is the life sciences industry. Beauhurst’s statistics expose an imposing 19% rise in startup funding, reaching £202 million. In the meantime, big-league deals are still on the process: Deliveroo received a £210 million investment in August, followed by Skyscanner, which raked in a £128 million deal.