London tech start-up investments are not far behind Silicon Valley, USA

By | April 13, 2015

It is a well-known fact that unprecedented amount of investment are pooled into the start-ups in Silicon Valley, the epicenter of the tech world as consumers and businesses are into more online services and investors are ready to invest in the next big thing. But recently, the same is felt elsewhere. Recent reports show that the investment in London’s technology sector has hit a record high as firms in the city has gained more than half-a-billion dollars in backing in 2015.


More than $682 million venture capital financing was obtained by the capital’s technology companies during the first quarter of the year, more than at any point in the past. This amount is more than the entire year of 2012 and marks 66pc increase when compared with Q1 2014, according to promotional company London & Partners. $411.6 million was the previous record in the fourth quarter of 2014.

The most funding was raised by WorldRemit, a London-based company that transfers money online, securing $100 million round led by Technology Crossover Ventures. Other firms that announced significant funding details are Fashion retailer Farfetch, augmented reality advertising firm Blippar and music technology company Shazam. The chief executive and co-founder of Blippar, Ambarish Mitra, thanked London and its Government for the support it provided for the company to reach its success.

The announcement suggests the UK capital’s digital tech ecosystem is continuing to go from strength to strength. The amount secured by London’s digital startups accounts for 80% of all UK funds raises by tech startups across the country during the first quarter of the year, suggesting that the capital’s tech sector is way out in the front of the 20 other tech companies the government is trying to promote.

Among the cities in Europe, London may be taking the lead but the amount of investment coming into the city is very small in comparison with the money pooled in the Silicon Valley firms. In the past years, US venture capital companies have invested $160 billion, with $70 billion of that channeling to the firms in California, according to NVC association. However, the figures from London & Partners suggest the US investors are welcoming to back up UK tech firms, with reputed centure capitalists like Andreessen Horowitz investing in online payments company TransferWise and virtual worlds creator Improbable.

London & Partners released data in February that showed London-based tech companies received $1.4 billion in funding in 2014, with $795.2 million coming from US-based investors. “London has shown that it can produce exceptional companies that grow to scale quickly and become significant players on the international stage,” said British angel investor Sherry Coutu.

The UK Government runs a Seed Enterprise Investment Scheme (SEIS), which gives an initial 50pc income tax break for investments up to $1.4 million capital gains deferral and loss relief. Investing across a many schemes can lessen risk.

The London technology ambassador and Partner at start-up investor Passion Capital said the quarter was great and very exciting for tech development of London. She also added, “London is one of the most electrifying tech hubs in the world, with companies and investors all brought here by the city’s idea and entrepreneurial spirit, as well as its talent and access to markets.”

The reports and figures show that London-based tech start-ups are proving they can access the international capital they need to grow into big global companies, said investorĀ Coutu. She said London has exceptional talented companies that has the capability to grow higher and have a significant role in the international market. This growth can power the entire economy of UK through creating new job and opportunities in London and other parts of UK.