London technology firms have attracted a record $1 billion of venture capital in the first nine months of 2014, outstripping last year’s entire total, $719.3 million, by over 30%.
The figure represents a tenfold increase on investments made in 2010, as the European economy continues to bounce back from the 2008 global financial crisis. It has been boosted by a number of high-profile seed rounds and exits, cementing London’s status as a top incubator of tech talent.
“These figures show, without any question, that this is an incredible period for technology firms in our city,” said London Mayor Boris Johnson. “Tech is blossoming and our reputation for innovation and discovery, allied with outstanding talent, is attracting record breaking levels of investment from around the globe.”
Some of the more startling funding rounds have been achieved by takeaway.com and farfetch.com, whose investments both exceeded $50 million. Food ordering service Just Eat, real estate site Zoopla and Candy Crush maker King Digital all floated for large figures.
Since those listings, King has come under intense criticism for its inability to diversify profits beyond its marquee title. The company has seen 20% of its share price wiped since its March IPO.
And Just Eat, which was originally founded in Denmark, was valued at $2.4 billion – or 200 times its pre-tax profit of $14 million – prompting predictions of another costly tech bubble.
However, 2014 has seen the arrival of a number of top-ranking VCs in the British capital, including Google Ventures and Santander joining lthe likes of Balderton, which has been in London for 14 years. “We’ve been working with many of the companies raising capital and growing today for years,” said James Wise, early-stage tech investor at Balderton. “We’ve seen the London community becoming better at sharing knowledge and attracting talent from across Europe, and growth in funding is coming as a result and recognition of those many years of effort.
“Of course it’s important that funding continues to come as a result of growth in the number of innovative businesses, rather than just hype about London being a great scene for tech start-ups,” he added. “So the rise in funding and importantly how it is spent by businesses is something that we are watching closely.
“It’s been an exciting quarter, but nothing has been dramatically different to any other. It’s the result of many years of hard work and change.”
A recent report by Startup Genome, an analyst, named London as the world’s 7th-best city in which to found a tech startup, and first in Europe. According to technology magazine Wired it ranks narrowly ahead of Moscow and Berlin as the continent’s most attractive startup zone.
“The raising of $1 billion capital in the first nine months of 2014 only goes to confirm that London is maturing into a globally competitive technology hub,” said Russ Shaw, founder of Tech London Advocates, a group which aims to marry startups with investment.
“London is attracting investment due to the strength of innovation in the capital,” he added. “From wearables and healthtech to fintech and adtech, London’s melting pot of digital innovation and creativity is creating world beating companies.
“And with the likes of Google Ventures’, Santander and Bauer Media arrival in London earlier this year, we look forward to further investment throughout the rest of the year and into 2015.”
*Article was amended on 08/10/14 to state Balderton has been operational in London for 14 years.