U.K. tech overtakes China, cementing its position as the world’s second-largest ecosystem by funding

China may be the world’s second-largest economy, but when it comes to startup funding, the U.K. is punching above its weight.

Startups in the U.K. raised $6.7 billion in funding during the first half of 2024, helping dethrone China and propelling the U.K. to second place globally for funds raised, according to a new report.

Crucial to the U.K.’s success were a dozen funding rounds worth over $100 million each, including those of digital bank Monzo ($620 million), lender Abound ($862 million), and automated driving startup Wayve ($1.05 billion).

While the overall U.K. figure was down 2% year on year, according to data from global market intelligence platform Tracxn, it remained more robust than that of China, whose funding sat at $6.1 billion in H1 2024, helping the U.K. move into the No. 2 spot globally.

The win is a milestone for the U.K. tech sector, which has remained under pressure owing to a string of challenges, including Brexit, COVID-19, and the subsequent global economic slowdown.

Only the U.S. saw startups raise more capital in H1, with a combined $54.8 billion raised across some 2,654 funding rounds in the first half of the year.

More concerning for the U.K. going forward is the relative lack of new companies valued at over $1 billion, a stark lack of IPOs, and a decline in both international and institutional investors backing U.K. startups.

Just one new unicorn was recorded in H1 2024 by Tracxn: hospitality management software provider Mews—which is arguably not even a U.K. unicorn, having been founded in Amsterdam.

On the IPO front, the London Stock Exchange has been battling a drought of new listings, with many high-growth companies choosing other European markets or the U.S. rather than the U.K.

Tracxn recorded only three U.K. IPOs, that of Marex, AWAKN, and Perfect Moment.

There were only 546 active institutional investors operating in the U.K. during the first half of 2024, compared with 729 during the first half of 2023. The number of international investors saw a similar decline, falling from 437 in H1 2023 to 326 in 2024.

With the arrival of new U.K. Prime Minister Keir Starmer, many will be hoping that the first Labour government in 14 years will continue to support the U.K.’s position as a critical player in the global tech landscape.

This story was originally featured on Fortune.com