The UK’s first Cyber Seed Fund has been launched by the government-backed British Business Bank, a significant move aimed at supporting early-stage UK cyber startups. The £50 million initiative sees venture capital firm Osney Capital’s Fund 1 planning to invest between £250,000 and £2.5 million in approximately 30 portfolio companies, with a focus on pre-seed and seed stages, followed by Series A rounds. The Cyber Seed Fund was heavily subscribed due to the rising enthusiasm around the UK’s burgeoning cyber startup sector.
The UK cyber sector has experienced notable expansion, with total revenue increasing by 12% last year to £13.2 billion and gross value added (GVA) rising by 21% to £7.8 billion. Government data estimated there are currently 2,165 cybersecurity firms operating in the UK, largely composed of microbusinesses, and the sector has seen an addition of 6,600 full-time jobs, marking an 11% increase, bringing the total to 67,300 jobs.
Challenges in the sector include a shortage of technically skilled professionals and high salary demands, as well as competition from rival firms. Startups often face difficulty attracting funding due to their decentralized structure and closed networks. Osney Capital aims to address these issues by providing early-stage investments, enabling startups to scale up and appeal to global investors.
Osney Capital partner Joshua Walter highlighted the UK’s potential on the global stage, thanks to its world-class talent and cyber capabilities. The British Business Bank’s substantial £36 million contribution signals the critical importance of cybersecurity for national security. Fiona Murray from the Prime Minister’s Council for Science and Technology stressed the importance of investing in the UK’s cybersecurity ecosystem to maintain national competitiveness and security.
Overall, the Cyber Seed Fund is seen as essential for driving innovation, securing national infrastructure, and enhancing the UK’s digital sovereignty and economic leadership in the cyber domain.
