Technical start-ups in London raised a record $ 25.5bn in funding last year, more than double the total in 2020, against a backdrop of investors pouring unprecedented amounts into start-ups worldwide.
This reflects a wider pattern of European growth last year, which received more than $ 115 billion in venture capital investment and $ 675 billion worldwide. According to a report by London & Partners and Dealroom, the UK ranks fourth behind the United States, China and India.
Twenty London technology companies reached a valuation of more than $ 1 billion last year, bringing the total number of “unicorns” to 75, including car insurance startup Marshmallow and fintech firm Starling Bank.
Funding rounds of more than $ 100 million accounted for more than half of all fundraising, with rounds of fintech competitors Revolut and Monzo together reaching more than $ 1.4 billion.
A spate of initial public offerings (IPOs) and transactions with special purpose acquisition companies (Spacs) has raised the total enterprise value of exit London start-ups to $ 88 billion, compared to $ 3.5 billion the year before. Last year, IPOs were from Wise, Deliveroo and Darktrace, while Cazoo and Babylon left through Spacs.
Fintech remains one of the fastest growing sectors in London, accounting for almost half of investment last year, but the pandemic also attracted sustained activity in telecommunications, healthcare technology and enterprise software as the pandemic continued to drive teleworking and communications.
“London’s strengths in technology and financial services helped drive record levels of fintech investment last year,” said Laura Citron, head of the government-funded promotion agency London & Partners.
She added that there was a “huge increase in funding for health technology” after the coronavirus pandemic.
Nearly 40 per cent of the investment that came in London was from the US, which had similar growth photo last year, with U.S. start-ups raising $ 330 billion, according to PitchBook data.
Sarah Guemouri, a principal at VC firm Atomico, said although being a pioneer last year, it was not an overnight success story for London.
“This has been made possible by decades of ecosystem building and an acceleration of digital transformation in all industries,” she added. “The UK is one of the most mature ecosystems in Europe and, of course, home to a larger number of scale-ups that have increased larger rounds to support their growth.”
But Jeremy Silver, CEO of technology agency Digital Catapult for early adoption, said the broader economy has not yet felt the effects of this increase in funding.
“London is riding a global wave of overall investment in technology, but we need to do more to harness the energy of beginners in the broader infrastructure and transfer the value of these investments to the economy,” he said.