Summer in London is spectacular. It’s the ideal time to soak up the sun and reflect on the first half of the year.

And what a year it’s been for the UK’s innovation economy so far. The recently published UK Innovation Update for Q2 2024, produced in partnership with Dealroom, tells a story of resilience, invention, and scale.

While analysing the data, I was struck by the clear parallels between the city and the broader UK innovation economy. I would argue that the entire local technology landscape can be described in the same way as the capital so often is.

Let me elaborate.

A case study in resilience

Fire, disease, and conflict have impacted the city throughout history, and it continues to bounce back. But this resilience is by no means reserved for the capital: data from the report shows that the local innovation economy has proven itself to be equally resolute.

Despite challenging market conditions over the past two years, UK startups raised $5.6B in Q2 2024, up 37% year on year, and up 47% compared to Q1 2024.

That brings the total raised in the UK during the first half of 2024 to $9.4B. That’s $1.3B more than H1 2023.

These figures speak to the adaptability of local innovators, but also demonstrate a shift in market sentiment - a message that’s reinforced by exits and M&A activity.

Clearly that “Keep calm and carry on” spirit is still alive and well.

Shaping Europe’s largest tech market

Halfway through 2024, UK startups have raised more VC investment than France and Germany combined, representing 30% of all European value created. All told, the UK innovation economy is now worth a combined $1.1T.

Again, although much of that activity is centred around the capital, innovation isn’t limited to the square mile.

The performance of university spinouts, particularly those from Oxford and Cambridge, has been particularly impressive this year. In addition to being Europe’s largest technology market, the UK is also the most prolific in terms of spinout value creation.

And let’s not forget the exciting growth in emerging hubs like Manchester, Edinburgh and Brighton. Opportunity really is everywhere.

Delivering the old and the new

In cities across the UK, historic monuments stand alongside futuristic skyscrapers – a contrast that’s present within the technology sector.

Fintech, the traditional cornerstone of the UK tech ecosystem, remained the most-funded aggregate sector in the first half of 2024, with $2.1B raised to date, but progressive technologies like AI are not far behind.

At the time of writing, UK AI startups have a combined value of over $250B, and AI now accounts for almost a quarter of all investment. Although Generative AI is leading the charge, sectors like autonomous mobility, energy storage, drug discovery and semiconductors are all enjoying strong performance.

With the sector on track for a record-breaking year, the intent to embed cutting edge innovation is self evident.

A magnet for international investment

In the first half of 2024, nearly three quarters of UK VC has come from abroad; the highest share in a decade.

This echoes the findings from this year’s VC Term Sheet Guide, which called out that international investors have a clear interest in Series B and C+ opportunities.

Evidently the UK provides founders with the structure and support they need to scale at speed, making them attractive to investors who are still on the lookout for quality businesses with strong fundamentals.

The UK is OK

The last 2 years have challenged tech entrepreneurs, and their response has been exemplary.

With 2024 on course to be the best since the outliers of 2021 and 2022, the resilience shown by the innovation community is set to pay off. New opportunities unlocked by the application of AI, and a steady appetite for quality from international investors, mean that the UK is primed to retain its position as the epicentre of the European innovation economy.