UK tech firms smashed 2014’s venture capital funding record in 2015
UK technology companies raised $3.6 billion in venture capital investment in 2015, an increase of 70% over 2014
The UK’s technology sector is continuing to attract record levels of venture capital funding, with companies raising more than $3.6 billion in 2015, according to figures compiled by London & Partners, the Mayor of London’s promotional company.
The investment represents an increase of over 70% on the record amount raised in 2014 ($2.1 billion). London-based tech companies raised a record $2.28 billion during the period, representing a 69% increase on the $1.3 billion raised in 2014.
Analysis of venture capital investment by London & Partners shows that since 2010 UK technology companies have collectively raised $9.7 billion, with London-based firms accounting for more than half of the total ($5.2 billion).
During 2015, the investment secured by London-based tech firms accounted for 63% of total venture capital investment raised by UK tech firms.
Mayor of London Boris Johnson MP said: “With a flourishing tech scene and one of the world’s leading financial centres, it is no surprise to see that London’s tech companies are attracting record levels of investment.
“Our world-class talent pool and our culture of innovation and entrepreneurial spirit are helping the sector to grow from strength to strength. We can expect the capital’s tech sector to continue to generate jobs and growth for the city’s economy for many years to come.”
London’s booming financial technology (FinTech) sector has also continued to secure record funding during 2015. The sector accounted for almost a quarter of all investment raised by London-based tech companies.
Some of the largest FinTech deals this year include Zopa ($106 million), TransferWise ($58 million) and WorldRemit ($100 million).
In April 2015, London-based peer-to-peer lending company Funding Circle secured the largest single deal of the year with a $150m funding round led by DST Global.
James Meekings, co-founder and UK MD at Funding Circle, said: “Small businesses are the lifeblood of the economy and we’re passionate about helping them to access finance by connecting them directly with investors.
“The money we raised, from some of the world’s leading investors, allows us to continue to increase the number of small businesses that can borrow through Funding Circle, both in the UK and across the world.”
Last year was also a strong one for the UK’s ecommerce sector, with a number of companies featuring in the top ten deals, including FarFetch ($86 million), MADE.com ($60 million) and Secret Escapes ($60 million).
The online takeaway start-up Deliveroo had a successful year securing a total of $195 million in three separate funding rounds. William Shu, co-founder and CEO of Deliveroo, said: “We're proud to be a London-based company. Not only is the city great for investors and tech talent, but it's been an ideal launch pad for our global business.”
Investment into London’s technology sector has been boosted by a growing number of venture capital houses choosing to setup funds and operations in London.
In October 2015, Octopus Ventures announced a $140 million London-based fund, joining the likes of Passion Capital, Index Ventures and Hoxton Ventures which already have a presence in London and have chosen the capital as a strategic base to invest in European technology start-ups.
“Investors are increasingly attracted by the diversity of London’s tech ecosystem but also our strengths in certain sectors such as FinTech,” said Eileen Burbidge, partner at Passion Capital and Mayor of London tech ambassador.
“With more investment coming in from overseas and greater access to London-based growth funds, there has arguably never been a greater time to start and grow a digital business in London.”
Separate research from London & Partners found strong backing for London tech companies from local investors, with 50% of all venture capital deals originating from investors based in the UK.
However, London tech companies are also enticing US investors, with almost one third (29%) of all deals in London-based tech firms originating from US venture capital investors.
>See also: Is FinTech a bubble?
Gordon Innes, CEO of London & Partners, added: “With London businesses receiving over 60% of all the funding into the UK’s tech sector, it’s clear that investors believe that London offers a great return on investment.
“As well as some of Europe’s most exciting start-ups, the capital now houses businesses of genuine scale. These companies are flourishing as they are able to benefit from the city’s easy access to talent and international markets. This makes London one of the world’s most attractive tech hubs for entrepreneurs and investors alike.”
In 2015, Index Ventures was the most active investor in London tech companies, participating in 12 deals worth up to $345.55.
Index’s high-profile investments in 2015 included Deliveroo, Secret Escapes and Onefinestay. The top five investment houses in London tech companies for 2015 also included Accel Partners, Balderton Capital, 83North and Hoxton Ventures.