London’s fast-growing technology startups are being backed with increasing amounts of capital, according to new figures released today.
The figures from London & Partners, the Mayor of London’s promotional body, reveal London’s digital startups received $682 million (£416 million) from venture capitalists in the first three months of 2015, an increase of 66 percent on the same period last year.
The announcement suggests the UK capital’s digital tech ecosystem is continuing to go from strength to strength, as the previous record quarter for venture capital was the final three months of 2014, when London’s digital startups received $411.6 million (£278 million).
The amount raised by London’s digital startups accounts for 80 percent of all UK funds raised by tech startups across the country during the first quarter of the year, suggesting that the capital’s tech sector is way out in front of the 20 other tech clusters the government is trying to promote.
While London may be one of the cities leading the charge in Europe, the amount of investment coming into the city is dwarfed by the amount going into Silicon Valley firms.
Over the last five years, US venture capital companies have invested $160 billion (£108 billion), with $70 billion (£47 billion) of that going to firms in California, according to the National Venture Capital Association.
But the figures from London & Partners suggest that US investors are increasingly open to backing UK tech firms, with well known venture capitalists like Andreessen Horowitz investing in online payments company TransferWise and virtual worlds creator Improbable.
In February, London & Partners released data showing that London-based technology companies obtained $1.4 billion (£950 million) in funding in 2014, with $795.2 million (£538 million) coming from US-based investors.
British angel investor Sherry Coutu said: “London has shown that it can produce exceptional companies that grow to scale quickly and become significant players on the international stage.
“Global investors are increasingly tapping into this ability, providing the funding and access to export markets that companies need to 'scale up'. This is powering the UK's entire economy through creating growth and new jobs both in London and beyond."
Unfortunately, many of the British companies that get backed by US investors then decide to move, or at least increase their presence, in the US, where they often hire local people and start considering the possibility of listing on US markets like Nasdaq instead of the London Stock Exchange.