London's digital start-ups secure record funding

Δημοσιεύθηκε: 1 Απριλίου 2015 - 23:10

London's fledgling technology companies are continuing to see increasing levels of investment, as new figures reveal that digital start-ups have received record amounts of venture capital money this year.

The figures from London & Partners, the Mayor of London's promotional body, suggest that digital groups received $682m in venture funding in the first three months of 2015, up 66 per cent compared with the same period last year.

The previous record quarter for venture capital investment was the final three months of 2014, when the capital's start-ups raised $411.6m.

Despite the rise, the figures pale in comparison with the cash being poured into Silicon Valley tech groups. During the past five years, US venture capital funds have raised $96bn, according to the National Venture Capital Association, and have drawn on existing cash on hand to invest a total of $160bn, $70bn of it in California.

But the increasing investment in London points to a strengthening of investor confidence that UK start-ups can compete on the global stage, despite years in which the nation's companies have lagged behind international rivals.

Sherry Coutu, a British angel investor, 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."

Since the start of the year, a number of London-based technology companies have announced significant funding deals. These include Farfetch, the luxury online fashion site, which raised $86m based on a valuation of £1bn; Shazam, the music discovery app, which raised $30m at a valuation of $1bn; WorldRemit, which raised $100m at a valuation of $500m; Blippar, the augmented reality company, which raised $45m at an undisclosed valuation; and Improbable, a "virtual worlds" creator that raised $20m at a valuation of $100m.

Most of those funding rounds included investment from Silicon Valley investors, as US venture groups look to cash in on London's fledgling digital groups.

In February, London & Partners released data showing that London-based technology companies obtained $1.4bn in funding in 2014, with $795.2m coming from US-based investors.

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>However, this influx of US cash may not always result in building up the capital's tech scene, as the availability of finance for companies as they become bigger is often cited by European start-ups as the reason they relocate to Silicon Valley.

Spotting an opportunity, US venture capitalists have also been seen to step in to fill the funding gap to make the type of multimillion dollar investments that are common in California but rare on these shores.

A Financial Times analysis last year revealed that European tech companies had raised more funding rounds of $10m or more than four years ago, thanks to US investors.

In 2010, European start-ups received $808m during growth funding rounds, either from US investors or through joint investments between US and European venture groups. By 2013, this figure had increased to $1.9bn and was projected to rise to $3.5bn by 2014.

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