The UK has created nearly three times as many unicorns than the US per dollar in early stage venture capital (VC) investment in the past decade, highlighting its attractiveness as an investment destination.
According to analysis from venture-building firm IMS Digital Ventures, the UK has converted $18.5bn (£13.8bn) of early stage investment into 57 successful unicorns, a ratio of 3.08 start ups per $1bn in seed investment.
In contrast, the US created just 1.22 unicorns per $1bn, as the country received a staggering $625bn in VC investment over the past decade.
Unicorns are privately held start up companies, with valuations of $1bn or more.
The UK’s ability to turn funding into successful start-up companies has caused it to become the second most attractive major economy in Europe and North America for early VC investment.
Anastasios Papadopoulos, founder and chief executive of IMS Digital Ventures, said: “The UK has been a breeding ground for some of the world’s most innovative and exciting start ups in the last decade.
“The UK has all the right ingredients to thrive as a hub for the companies that can shape the industries of the future.”
VC firms eyeball the UK
VC investors have increasingly recognised the UK’s potential as an investment destination over the past ten years, significantly increasing the pool of capital available to investors.
Seed investment has jumped from $50m in 2014 to $538m in 2024, while early stage investment surged from $576m to $3bn over the same period.
This has been credited to the country’s strong legal framework as well as London’s global status as a major financial centre, able to provide start-ups with both the stability and capital needed to get their business off the ground.
Finance and insurance driving UK success
In particular, the finance and insurance sectors have been key in driving the UK’s growing success, representing nearly 50 per cent of all companies that have hit unicorn status since 2014.
This included neobank Monzo, which raised roughly $50m in funding between 2015 and 2017, and insurance tech firm Marshmallow, which raised $190m.
However, artificial intelligence is also widening its UK influence, creating six billion dollar valuation companies since 2014, as more VC firms eye opportunities in the growing sector.
Papadopoulos said: “There’s a clear opportunity to support more start-ups in high-growth areas such as artificial intelligence, cybersecurity, and biotech.
“With the right regulatory environment and continued support for emerging technologies, the UK is well-positioned to build on its strong foundation and create the next generation of British tech unicorns.”