Despite the severe economic impact of the coronavirus pandemic, UK tech startups have raised impressive levels of investment that come close to 2019 in the first part of the year, according to figures published today.

Data compiled for the Digital Economy Council by Tech Nation and Dealroom show that UK tech startups raised $5.3bn in venture capital funding between January and May 2020. The amount raised in the same period in 2019, which was a record year, was $5.4bn, suggesting this could be another strong year, despite Covid-19.

Money raised in London was particularly strong, amounting to more than Stockholm, Tel Aviv, Berlin and Paris combined.

However, it should be noted that much of this investment was agreed in principle prior to the pandemic, with funding raised in the second half of 2020 not expected to reach the levels of the second half of 2019 due to the disruption it has caused.

Nevertheless, compared to much of the rest of the economy, this still places UK tech in a strong position, suggesting it could be a beacon of hope amidst a 2020 GDP growth estimate of -8.8%, according to GlobalData.

“These numbers reflect the inherent strength of the UK tech sector and reinforce my strong belief that the UK remains an attractive destination to start and grow a successful digital business,” said Cindy Rose, UK CEO of Microsoft.

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By GlobalData

“Undoubtedly, there are economic headwinds ahead, but with our world class talent, strong startup ecosystem and the accelerated pace of technology adoption in the UK, I’m confident the UK tech sector will emerge strongly from this crisis and be a key factor in driving inclusive economic growth and recovery.”

Not all good news: Challenges ahead for UK tech startups

However, while these numbers do portray an industry in a strong position compared to much of the economy, there are challenges ahead as the coronavirus recovery begins.

Two in three tech startups in the UK expect revenues to slump by at least a quarter. Those in the business-to-consumer space have experienced particular challenges, with 39% seeing March revenues decrease by more than half. And many are not well equipped to withstand long-term revenue drops, with two in five saying their funds will last them less than a year.

However, the UK government is optimistic, touting its financial support for startups amid the recession, primarily in the form of the Future Fund, as evidence of its support.

“The UK’s tech sector has shown resilience in these challenging times and the levels of investment in the year to date have consolidated our Europe-leading position,” said Oliver Dowden, Secretary of State for Digital, Culture, Media and Sport.

“We have a vast pool of talent in the country’s digital and tech firms who have played a big part in supporting communities across the UK and beyond throughout the pandemic and I applaud them for their ongoing efforts.

“The government will continue to champion and support the sector as it navigates the months to come as we step up our Coronavirus recovery plans. We will back entrepreneurs, encourage innovators and help businesses make the most out of the opportunities the digital and tech world provides.”

Read more: Future Fund: The tech sector reacts to UK Chancellor’s plans to help startups