The UK’s venture capital (VC) space recorded a significant year-on-year decline of 41.3% to $615.4m (£485.2m) in January, new figures from GlobalData have shown.

Deal volume also fell annually by 40.2% from 117 in January 2023 to 70 in the first month of 2024.

This decline, attributed to macroeconomic challenges and geopolitical tensions, reflects a “cautious” approach among investors, GlobalData said.

Despite the setback, however, the UK remains a prominent player in the global VC market, though facing increased competition from other European counterparts.

“Macroeconomic challenges and geopolitical tensions impacted investor sentiment and VC funding activity across most of the key markets globally, including the UK as well,” said lead analyst at GlobalData, Aurojyoti Bose.

According to the data and analytics company, the severity of dent in investor sentiment and the cautious approach adopted by VC firms while committing big investments can also be understood from the fact that the UK did not see the announcement of a single VC deal valued more than $100m during January 2024.

The UK is still among the top five markets globally for VC funding activity in terms of deal volume as well as value. The UK accounted for 6.1% share of the total number of VC deals announced globally during January, while its share in terms of deal value stood at 4.4%.

Bose added: “While the UK’s VC landscape has encountered significant headwinds, its long-term potential and resilience remain undeniable, positioning it as a vital player in shaping the future.”

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