Mayor of London Boris Johnson has teamed up with tech investors on a new £85 million fund that will be used to bankroll approximately 150 London tech startups over the next three years.
The fund, known as the London Co-Investment Fund, is backed with £25 million from City Hall. A further £60 million is expected to come from private sector partners including Wellington Partners, Playfair Capital, London Business Angels, Angel Lab, Firestarter and Crowdcube/Braveheart Consortium.
The London Co-Investment fund will aim to make one investment each week, starting in January. It will invest between £250,000 and £1 million in businesses and will only invest alongside other private sector investors.
“Despite this tech boom, we know that many budding start-ups find it difficult to raise the finance they need to grow," said Johnson.
"This new fund will ensure the tech giants of the future can get the support they need to bring their ideas to reality and deliver jobs and growth for the capital.”
It’s hoped the fund will be invested in more than 150 small businesses and create up to 2,600 new jobs.
Businesses wishing to apply will need to show they have the potential to create new jobs and be capable of delivering financial returns of ten times the cash invested in them.
The latest statistics suggest there are currently over 34,400 digital technology businesses and 155,600 digital technology employees in London, including Spotify and Huddle, with more than 32 incubators looking to assist startups in establishing themselves, often in return for an equity stake.
A number of other funds operate out London but the vast majority of them invest in companies all over Europe. For example, this year Google Ventures announced a £60 million fund to invest in European startups, as did Santander.
The London Co-Investment Fund appears to be one of the first pots of money dedicated to London tech startups.