US investors launched an unprecedented raid on British technology companies last year, according to figures compiled ahead of the biggest overhaul of foreign takeovers for two decades.
A total of 130 UK tech firms were acquired by American companies between January and mid-December 2021, data from start-up monitor Beauhurst shows – up from 87 the year before and above the previous record of 105 in 2018.
While the figures will be seen as a sign that Britain is becoming a hub for start-up creation, they may also raise concerns that promising domestic businesses are being sold before they can grow into their full potential.
It comes just before a new national security law comes into force which will allow ministers to intervene in far smaller deals.
At present the Government cannot examine takeovers of companies with a turnover of less than £70m a year in most industries, limiting its ability to prevent promising players from being snapped up before they reach this stage.
The new law, which takes effect on Tuesday, will remove this threshold and require companies of all sizes in areas such as advanced robotics, artificial intelligence and quantum computing to notify the Business Department if they are being sold to an overseas buyer.
Although Conservative MPs are particularly concerned about the risks posed by Chinese acquisitions, the Covid crisis has sparked a new interest in national resilience which has also left many keen to preserve British business from ownership by allies such as the US.
Tobias Ellwood, Tory chairman of the Defence Select Committee, said: “In the global push to become more strategically independent after Covid, America is doing an incredible job to the detriment of Britain.
“We need to recognise the impact this is having on our own capabilities and sovereign strength.
“It goes against the grain of the Government’s wise long-term ambition becoming a high-tech superpower. That ambition isn’t supported by the current laissez faire attitude of allowing our key high-tech businesses to be purchased in this way.”
US companies are the biggest foreign acquirers of British tech firms, while transatlantic venture capital investment has also soared in recent years.
Prominent deals this year included Snapchat’s $500m (£374m) takeover of WaveOptics, which designs technology for augmented reality glasses, and Fortnite maker Epic Games’ acquisition of Mediatonic, the developer behind the hit video game Fall Guys.
