Venture capital firms invest nearly £1bn in UK CreaTech

New CIC report reveals VC investment into the UK’s creative tech sector.

Janet Hull OBE, IPA Director of Marketing Strategy and Chairman of the CIC Createch welcomes new report outlining VC investment into the UK’s creative tech sector.

Venture capitalists invested a record £981.8m in 2020 into UK CreaTech businesses that bring together creative skills with technologies such as artificial intelligence to produce new services and revenue streams.

This is according to The CreaTech Report 2021 from the Creative Industries Council (CIC), the forum of UK government and creative industry leaders, in association with Digital Catapult and Moore Kingston Smith, to increase understanding of the fast-growing CreaTech space.

These new services and revenue streams include start-ups developing innovations in media investment, creative production, and other parts of the advertising and marketing ecosystem.

The report, carried out by Tech Nation, reveals that the level of funding - up from £803m in 2019 - highlights the UK’s position as European leader in CreaTech VC investment and the third biggest destination worldwide, after the USA and China. CreaTech accounted for a higher share of all VC tech investment in the UK (9%) last year than in the USA or China (both just over 6%).

In addition to attracting interest from venture capital, CreaTech has been acknowledged by UK government ministers for its potential to help the creative industries return to growth after the disruption caused by the Covid-19 global pandemic.

Further report highlights:

  • In 2020, the UK received twice as much CreaTech venture capital investment as the next biggest European market, France (£487m), and three times more than Germany (£266m).
  • UK companies in the Marketing Tech category received an estimated £206m of VC funding with Ad Tech businesses benefitting from £75m.
  • The modest median average of fundraising deals, which varied between about £0.3k and £1.6m across different UK regions, reflects the early-stage, small scale of the companies that VCs are backing.
  • However, UK CreaTech has already produced tech unicorns – privately-listed businesses each valued at more than $1bn – including Improbable, a virtual simulations company.
  • Investment in UK CreaTech has almost doubled from the £498m reported in 2017, as venture capital firms have increasingly seen the commercial potential of CreaTech innovations.

Commenting on the report:

Janet Hull OBE, Chair of the CIC CreaTech and Director of Marketing Strategy at the IPA, said: "Lesser known than FinTech or EdTech, CreaTech is the intersection of creative and tech industries where artificial intelligence, algorithms, and specialised software are transforming creative products, services, and business processes.

The CreaTech Report 2021 provides an evidence base for tech companies and leaders to develop their understanding and strategies to take advantage of the growth opportunities enabled by CreaTech.

Tim Davie, BBC Director General and Industry Co-Chair of the CIC, said: “As the government has recognised in its Plan for Growth, the creative industries are a major success story for the UK and a critical driver of innovation and growth. CreaTech raised almost £1bn of new investment during a global pandemic and economic downturn, which shows investors also recognise the potential of UK creative businesses.

"The UK’s creativity and innovation will play a critical role post-pandemic in boosting recovery and attracting investment all around the UK. With the right support, the UK has an opportunity to continue to be a world leader in the fast-growing CreaTech space."

Culture Minister Caroline Dinenage said: "The creative industries make a huge contribution to our country, both culturally and economically, constantly finding new ways to engage audiences, create jobs, and generate investment.

"We will continue to work hard to encourage and enable the growth of CreaTech. As almost £1 billion in investment clearly demonstrates, CreaTech will play a vital role as the UK builds back better from the challenges of the Covid-19 pandemic."

Dr George Windsor, Head of Insights at Tech Nation, the growth platform for tech companies and leaders, said: "CreaTech has undoubtedly stood out as an emerging area of activity to watch over 2020, with VC investment of just under £1bn helping the UK lead in Europe, and punch above its weight in the global tech rankings.

"We have seen world leading companies started and scaled in the UK, including global media company, Moonbug, and AI powered smart glasses provider, Oxsight - as well as a slew of fast growing CreaTech firms right across the UK. Looking to 2021, I’m excited to see the growth that these companies will bring to the UK, and the new forms of creativity that will be unleashed through cutting edge technology."

Esther Carder, Partner at Moore Kingston Smith West End, the accountancy firm, said: "We are excited to be working so closely with CreaTech businesses and entrepreneurs – this is a group that demonstrates the UK’s strength as a nation of innovators and trailblazers. Those CreaTech businesses that we see are all singularly energised and poised to do great things on a global level. We look forward to seeing CreaTech expand and are committed to supporting these businesses play to their strengths."

The new report is the first stage of research that will also look in greater depth at CreaTech’s impact on UK jobs and skills.

CreaTech will also be in the spotlight this month as part of a dedicated session at the SXSW Online Festival on 18 March and at a Parliamentary Webinar, hosted by the CIC also on 18 March.

Download The Createch Report 2021


Last updated 21 January 2022