Investors can't get enough of London's tech start-ups

Venture capital funding for the capital's technology firms has increased 16-fold since 2010.

by Jack Torrance
Last Updated: 16 Mar 2016

Banks might still be reluctant to lend to small businesses, but the pockets of venture capital firms are looking deeper than ever. According to London and Partners, the capital's promotional agency, VCs ploughed almost $1.7bn (£1.1bn) into London tech companies in the first nine months of this year.

That's well above the $1.4bn they put up in the whole of last year and more than 16 times the $101m invested in 2010. London's tech firms have raked in $491m in the last three months alone. The co-working spaces of Shoreditch are awash with cash, it would seem.

'Today’s figures and the fact that London is home to more software developers than anywhere else in the world validate the fact that London’s tech sector is maturing and is one of the world's leading tech hubs,' said Eileen Burbidge, a partner at Passion Capital and chair of Tech City UK.

The massive surge is thanks in no small part to increasingly large 'later-stage' investments, which made up about half of all funding so far this year. For instance takeaway delivery service Deliveroo hoovered up $70m in July and, the furniture ecommerce site backed by Brent Hoberman, landed $60m in the same month.

There are downsides to free-flowing easy money, of course. Plenty of people on both sides of the Atlantic have drawn parallels between today's booming technology sector and that of the late nineties in the run-up to the dotcom crash. Tech might have matured a lot since, but with start-ups like Yo, which simply allows users to send the word 'yo' to each other, landing a $1m investment, it's not hard to see their point.

Greater investment also intensifies the fight for resources in the capital. The cost of renting office space has sky-rocketed, and more well-funded start-ups means an even fiercer battle for the limited number of tech-savvy workers. Soaring investment levels are an undeniable victory for London's tech entrepreneurs, but they had better make sure it doesn't go to their heads.

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