Boris Johnson has said he wants London’s technology sector to compete on the same level as the likes of Silicon Valley, and today he put some of his (well, our) money where his mouth is. The mayor is putting £25m into a new London co-investment fund, which will be invested alongside private cash into new businesses working in digital, science or technology.
The £25m will de distributed via six private sector partners including two VC firms, three angel syndicates and the crowdfunding platform Crowdcube over the next three years. For every £1 invested from the mayor’s Growing Places Fund, the partners will be obliged to invest or secure investment of at least £1, with a target of an £2.90 on average.
Applicants will be expected to go through the usual process of showing they can generate a good return for investors and that the money will help them create jobs. It’s hoped the fund will result in one investment each week and a total of more than £80m of funding for London’s tech sector.
‘London’s tech sector is flourishing and the city is a hotbed of talented young and ambitious people buzzing with exciting ideas who are setting up new companies in their droves,’ BoJo said.
‘Despite this boom, we know that many budding start-ups find it difficult to raise the finance they need to grow. This new fund will ensure the tech-giants of the future can get the support they need to bring their ideas to reality and deliver jobs and growth for the capital.’
Advocates of alternative finance will be pleased to hear that £5m of the cash will be invested through the equity crowdfunding platform Crowdcube - overseen by the fund management firm Braveheart.
‘For the UK Government to invest in London’s top start-ups through Crowdcube, alongside the crowd, is an exciting prospect and underlines Crowdcube’s reputation as an effective way for high growth tech firms to raise finance,’ Crowdcube’s chief marketing officer and founder Luke Lang said.
£80m isn't a vast amount in comparison to the kind of money that changes hands among investors in Silicon Valley and New York, but it’s certainly a good start. And maybe, just maybe, it will help launch Britain's answer to Google, Facebook and Amazon.