Venture capital investment into Britain’s technology sector has reached a record high with London-based companies securing around 75% of the $2.2bn raised by UK firms since the beginning of this year, according to data from London & Partners1, the Mayor of London’s inward investment company.
Record Venture Capital investment in UK Tech sector over last 9 months
Altogether UK tech companies have raised more in the first nine months of 2015 than the $2.1 billion raised in the whole of 2014. Meanwhile, London-based tech companies have raised $1.6 billion so far this year, eclipsing the $1.3 billion for the total amount raised in 2014.
Five years on since the launch of the Tech City project, VC investment into London technology companies has sky-rocketed, with over ten times more investment in 2015 than in 2010. This coincides with a rapid increase in the number of tech businesses, forecast to rise to 51,500 by 2025 according to Oxford Economics.
Mayor of London Boris Johnson MP said: “As a global financial and technology powerhouse, it is no surprise to see that the capital is the jewel in the crown when it comes to venture capital investment in the UK tech sector. With record investment helping companies to flourish, access to top tech talent, world class universities and great transport links, there has arguably never been a better time to start, grow and scale a digital business in London.”
Eileen Burbidge, Partner at Passion Capital and the Mayor of London’s tech ambassador for the city, said: “In little more than five years we have seen investment in London’s tech sector increase tenfold. Even more importantly, we are now starting to see more later-stage investments which support the scaling of more London tech businesses. Today’s figures and the fact that London is home to more software developers than anywhere else in the world validate the fact that London’s tech sector is maturing and is one of the world’s leading tech hubs.”
Gordon Innes, CEO of London & Partners added: “London is fast becoming a world class destination for tech. The capital’s access to talent and international markets makes it an attractive location for some of the world’s leading investors. From fledging start-ups to high growth companies, the money pouring into the sector is helping to support the growth of firms at all stages of the business life cycle. With London businesses securing around 75% of all investment into Britain’s digital economy, it is no surprise that the tech sector is a leading source of jobs and growth for London’s economy.”
In the last 3 months UK firms have secured $775 million VC funding while in London tech companies have attracted $491 million.London’s e-commerce start-ups have been particularly successful in securing funding over the last three months, according to London & Partners. Ecommerce firms such as Deliveroo ($70m), MADE.com ($60m), Secret Escapes ($60m) and Prodigy Finance ($19.5m) raised a combined amount of $246m – representing 50% of the total amount raised in London this quarter.
London’s booming fintech sector also continues to attract record levels of VC investment with a total $554 million raised this year by September, already surpassing 2014’s total of $487 million. This quarter saw London-based peer-to-peer lending firm MarketInvoice raise $10m Series A funding from leading London VC firm Northzone, which also backed Spotify.
Jeppe Zink, London-based General Partner at leading VC fund Northzone comments: “We are seeing interesting activity in London across all stages of investment, especially in sectors such as FinTech, E-commerce, and on-demand services. Injections of growth capital are enabling companies to scale, and our investment in MarketInvoice, part of a strategy of supporting leading FinTech companies, is a perfect example. Having worked with the team since last year, and with fantastic metrics on side, our most recent investment is all about backing their rapid growth plans.”
Anil Stocker, co-founder and CEO of MarketInvoice, said: “It’s vital that London sees one or two major international tech success stories in the next ten years. The city is playing host to a dazzling array of high-growth tech firms, and the positive investment environment should see some of these companies scale into international tech leaders – the greatest potential for this is clearly in the fintech space, where the talent mix of tech and finance experts is already making us a global leader.”
The amount of later-stage VC funding being secured by the capital’s tech start-ups is also rising sharply, demonstrating how the sector is starting to mature. According to London & Partners later-stage investment 2 has risen by 387 per cent over the last four years to $791.55m.
This week, London based venture capital investor Octopus Ventures announced the launch of the $140m Octopus Zenith Opportunities II LP (“Octopus Opportunities fund”), aimed at providing growth capital to successful fast-growing later-stage companies across Europe. The first investment from the Octopus Opportunities fund has already been made, with Octopus leading the recent $60m round with Google Ventures into Secret Escapes, the London-based members only luxury travel site.
London is a leading international destination for wider foreign investment. According to the recently launched IBM Global Location report, London brought in more foreign investment and created more jobs than any other city in Europe. In 2014, London attracted 235 foreign investment projects from companies relocating and expanding overseas.
London & Partners helped 270 international companies establish their businesses in London in the financial year 2014/15, with the tech sector seeing the most number of investments, representing 40 per cent of all companies investing the capital. According to separate research by professional services firm EY more than 1,000 international tech investment projects were located in London between 2005–2014, significantly more than the next most attractive city, Paris (381).
