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2016: A year in UK tech

2016-in-review
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If you’re reading this, you’ve survived 2016 (congrats!), and that’s no small feat, considering it will probably go down in history as one the most unpredictable years in recent times.

In the past 12 months, we’ve witnessed a series of unexpected events: the UK’s Brexit vote, Theresa May’s rise to power, the pound’s decline in value and Trump’s US election victory.

But although there’s no denying 2016 has been a whirlwind, it’s also left a lasting legacy in the tech world. So, here it is: the good, the bad and the ugly.

Tech Nation: UK tech tops European investment tables raising £6.8bn in 2016

The funding rounds

Edinburgh-based Skyscanner started the year off with a bang when it announced the closure of a whopping $192m funding round in January. The firm, which was later acquired by Chinese firm Ctrip in a deal worth £1.4bn, received backing from five new investment partners and landed tech unicorn status as a result of the raise.

Farfetch held the beacon for e-commerce companies up and down the country, raising an impressive $110m in Series F funding led by Temasek, IDG Capital and Eurazeo.

Deliveroo also raised the bar in the funding stakes as it closed a $275m Series E in early August, following on from a £100m Series D in November 2015. The London-based firm, which is now competing against the likes of UberEats, may have raised $474.59m since inception, but 2016 has not been an easy ride for the on-demand delivery service firm.

In fact, the company caught the media’s attention earlier in the year as it emerged that a group of couriers working for the firm were set to take legal action to gain union recognition and employment rights. The unrest came to light after Uber, another sharing economy darling, lost a legal battle in which two drivers successfully argued they were employees of the firm as opposed to self-employed workers.

Darktrace ($65m), Student.com ($60m), Blippar ($54m) and HighQ ($50m) were also among the most well-funded UK tech companies of 2016.

The acquisitions

It’s been a busy year for UK tech companies, many of which have been snapped up by larger firms in the space.

Despite its struggles over the last 12 months, Twitter made headlines earlier in the year when it snapped up London-based firm Magic Pony in June. Although the terms of the acquisition remain undisclosed, the San Francisco-based firm is thought to have paid up to $150m for the startup as part of its investment drive into machine learning.

Cambridge-based ARM holdings, Britain’s biggest tech company, sent ripples of excitement across the country’s technology sector when it announced it was set to be acquired by Japanese telecommunications giant Softbank in September. Widely cited as the biggest-ever tech acquisition in the UK, Softbank paid a staggering £24bn in cash. The sale was overwhelmingly backed by ARM Holding’s shareholders, quelling cries from influential figures that the deal should be blocked. As a result of the agreement, ARM’s listing from the London Stock Exchange was removed, putting an end to the company’s 18-year existence as a publicly traded firm.

This year was a good one for Swiftkey’s co-founders Jon Reynolds and Ben Medlock, who are thought to have walked away with $30m each when the startup sold to none other than Microsoft.

Three months later, in December, electronics manufacturer E2v Technologies made public that it was set to be acquired by Teledyne Technologies for £620m. The terms of the deal will see the Chelmsford-based firm’s shareholders receive 275p per share.

The investment funds

2016 has also seen a series of technology investment funds rise from the ashes and there seem to be plenty of opportunities for tech startups to raise investment.

Seraphim Capital, for example, announced the launch of its early-stage £80m space tech venture fund, which is set to reach its final close over the next two quarters. The fund has already secured £50m from the British Business Bank, various international space companies, family offices and individual investors.

Earlier this month, billionaire entrepreneur and Microsoft co-founder Bill Gates launched a $1bn global investment clean tech fund. Breakthrough Energy Ventures (BEV), as the fund is known, brings together heavyweight investors including Virgin Group founder Sir Richard Branson, Amazon’s Jeff Bezos and Jack Ma, the founder of Chinese e-commerce giant Alibaba. Speaking at the time of the announcement, Gates told told Quartz that the fund, called Breakthrough Energy Ventures (BEV), could invest in “anything that leads to cheap, clean, reliable, energy”.

Softbank Group, which as mentioned bought ARM Holdings, also announced the launch of a global tech investment fund which could grow as large as $100bn. Tentatively called ‘Softbank Vision Fund’, it’s believed that it could potentially become the world’s largest private equity investment vehicle. Saudi Arabia’s top sovereign wealth fund, the Public Investment Fund (PIF) will be the lead investor; potentially contributing up to $45bn over the next five years.

Sapphire Ventures jumped in on the action too; announcing the closure of $1bn fund to invest in tech startups across the world. Although it is based in the US, a spokesperson told Tech City News at the time that the fund would seek to invest a portion of its funds in the EMA region; focusing on the UK and Israel.

Other funds announced this year include Partech Ventures’ €100m Seed fund and the £2bn annual fund announced by Theresa May, which will focus on robotics and biotech.

The IP bill

The UK government’s approval of the Investigatory Powers Bill, otherwise known as Snooper’s Charter, added to this year’s controversy.

Despite mounting opposition from thousands of people, the bill was officially signed into law by the Queen in late November. The royal seal of approval came after a petition asking the UK government to revoke the act garnered over 134,000 signatures.

Signatories of the petition argued that the bill would grant “unprecedented levels of power” to the authorities and that these must be revoked. But it wasn’t just the public that opposed the bill. At the beginning of the year, the likes of Facebook, Google, Microsoft, Twitter and Yahoo submitted evidence to the UK parliament voicing concerns over a draft of the bill, to little avail.

Opponents were, however, given a glimmer of hope when the European Union’s highest court ruled that “general and indiscriminate retention” of emails and electronic communications by governments was illegal.

The judgement, which could trigger serious challenges against the Bill largely championed by Theresa May, highlighted that only targeted interception of traffic and location data in an attempt to tackle serious crime was justified.

The hacks and security breaches

A roundup of 2016 would not be complete without mentioning the hacks and security breaches suffered by some of the world’s best-known businesses throughout the year.

Yahoo’s huge security breach will undoubtedly have affected some of its users in the UK as the latest data breach is believed to have affected more than one billion accounts – approximately double the number of accounts affected in its September breach. The company, which made headlines across the globe for all the wrong reasons, is advising users who may have been affected by the breach to change their passwords. The issue, some commentators have argued, is that the hack is thought to have taken place all the way back in August 2013, meaning that whoever stole the information has had over three years to exploit it.

The next hack affected none other than Facebook founder and CEO Mark Zuckerberg. His password, originally leaked in 2012 when 100 million LinkedIn passwords were stolen, was used to hack his Pinterest and Twitter accounts in June. Twitter CEO and co-founder Jack Dorsey and Google CEO Sundar Pichai also fell victims to hackers throughout the year.

So there you have it, 2016 has seen huge funding rounds and staggering acquisition deals but it’s also left tech companies to deal with a sea of uncertainty following the Brexit referendum and other notable political events overseas. The next question is: what will 2017 have in store for the country’s technology sector?

Stay tuned for our 2017 tech predictions piece which will take a look at what we can expect to see next year.

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