All things considered, the UK's tech scene is probably feeling cautiously optimistic at the moment. Last week it emerged that investors had ploughed $3.65bn (£2.5bn) into private UK tech firms in 2015.
It certainly seems the hallowed ‘unicorn’ $1bn valuation that many high-growth companies lust after is much more attainable now: the UK has produced nearly 20 unicorns since 2000 according to GP Bullhound. Today the latest member to join that no-longer-so-exclusive club is travel search engine Skyscanner.
Five new partners (Artemis, Baillie Gifford, Khazanah Nasional Berhad, Vitruvian Partrtners and Yahoo! Japan) have invested £128m between them. Sources told the Financial Times the investment values the Edinburgh-based travel business at $1.6bn, twice its reported valuation in 2013.
Skyscanner said the injection will be used to fund acquisitions and expand internationally to fend off slowing revenue growth. Its most recent financial filing showed the company’s 2014 revenues rising 42% year-on-year to £93m, but this was a slowdown after turnover doubled in 2013.
It has 50m monthly users, but faces stiff competition from Priceline’s Kayak as well as Chinese site Qunar. Skyscanner’s international efforts were already well underway with the acquisition of Chinese travel search firm Youbibi in 2013 and a joint venture with Yahoo! Japan, but in a highly competitive sector, branching out further remains a priority.
The firm’s CEO, Gareth Williams, said, ‘Skyscanner has enjoyed high double-digit growth rates for some years now, and has been profitable since 2009.’ That's obviously good news for Skyscanner and its various investors, but does beg the question just how much longer the UK tech scene can continue on its impressive trajectory.
Ecommerce firms have been particular beneficiaries of the increased investment streaming into the UK – Deliveroo ($70m), MADE.com ($60m) and Secret Escapes ($60m) raised nearly $200m between them in the three months up to October 2015.
But the overall 2015 investment figure has been cause for some concern. It marked an eye-watering increase of over 70% of the record raised in 2014 ($2.1bn), which is heightening fears of a bubble. The UK’s tech start-ups are generating more investment than at any time since the end of the dotcom boom.
During the past year, other British start-ups to receive unicorn status include online clothing retailer Farfetch, music discovery app Shazam, and P2P lender Funding Circle. Whether the rising number of unicorns is simply a sign of the progression UK tech companies have made, or an indication that such valuations are becoming fuzzier and more difficult to justify, is up for debate. But it’s probably worth being cautious about the sky-high figures being thrown around nonetheless.