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London booms as a home for tech start-ups, report shows

·3-min read
Peter Butler and James Terry, co-founders of Dishpatch and Angela Hartnett, chef owner of Cafe Murano (Handout)
Peter Butler and James Terry, co-founders of Dishpatch and Angela Hartnett, chef owner of Cafe Murano (Handout)

London tech startups have raised £7.9bn in venture capital funding in the first half of the year, according to a new report on startups around the world.

Figures from the European Startups report show that venture capital raised in the first six months of this year was more than double that raised by the same point in 2020.

The report also shows that London is behind only the Bay Area, Beijing and New York City when it comes to creating unicorns - the fast growing tech companies like Wise, the startup money transfer business which listed directly on the London Stock Exchange this week with a value of over £9bn.

London has 71 unicorns, significantly more than any other European capital. Paris, which is the second European capital for unicorns, has just 21. London-founded startups that reached unicorn status in 2020 and 2021 include Hopin, a live events platform, and Zego, an insurance startup for delivery drivers.

London startups that could soon become unicorns include digital bank Zopa, payments company Curve and pensions platform PensionBee.

The report, compiled by Dealroom for the European Commission, also reveals that those tech companies founded in London in the 31 years since 1990 are now worth a staggering £376bn.

Janet Coyle, managing director of business growth at London & Partners, said: ”London has the “finance” of New York, the “tech” of Silicon Valley and the policymakers of Washington, all within a 15 minute journey by tube. These factors make London one of the world’s most connected global tech hubs in the world, with all the necessary ingredients for startups to succeed, from investors to world-class universities and talent to policymakers – this is our secret sauce.

Globally investors are moving more capital into venture as tech has become a safe asset. More money is flowing from the USA and Asia into European marketplaces in particular, in the wake of the ongoing pandemic and the UK and London look set to be on track for another record breaking year in 2021.

In the last six months, according to the Dealroom figures, tech company valuations have ballooned to over $35 trillion (£25bn) – a valuation that places their combined value as higher than the whole of the USA’s $20.81 trillion GDP in 2020.

However, the report highlights that there is still a shortage in VC funding going to tech firms with at least one female founder; all male teams secured 86% of all venture capital funding.

London meal kit delivery firm Dishpatch raised £10m last month in seed funding from US investor Andreessen Horowitz and London-based investor LocalGlobe. It is one of a number of tech startups that have attracted record levels of venture funding this year.

“Tech continues to be a major economic driver, attracting investment and jobs at a time when the rest of the economy slowed down as a result of the Covid-19 pandemic,” said Yoram Wijngaarde, founder and chief executive at Dealroom.

“Investment into startups is at an all-time high because investors see tech as a safe asset and innovation is continuing as entrepreneurs are identifying gaps in the market and are bulging with ideas. This is a huge vote of confidence in London’s tech sector.”

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