Venture capital (VC) funding in the United Kingdom dropped 41.3% year-on-year to US$615.4 million in January, as investors maintained a cautious approach amid macroeconomic challenges and geopolitical tensions.

The UK remains a prominent player in the global VC market, though facing increased competition from other European counterparts, according to data and analytics firm GlobalData.

Deal volume fell 40.2% to 70 in January, from 117 a year ago, while the disclosed value decreased from US$1 billion to US$615.4 million.

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

The UK, which traditionally has been the top European market in both deal value and volume, managed to retain its leadership position by volume only in January 2024 while Germany led by value. In fact, not a single VC deal valued at more than US$100 million was announced in the UK during the month.

Nonetheless, the UK accounted for 6.1% of the total number of VC deals in January while its share in terms of deal value stood at 4.4%, thus remaining among the top five markets globally for VC funding activity.

“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,” says Bose.