2020 was a record year for VC funding into Europe’s tech sector, and London was at the heart of that growth. An internationally-overlooked cluster of startups near a congested roundabout just a decade ago, in 2020 London tech firms raised $10.5B. The city now truly competes with the world’s most significant tech hubs – the new report with London & Partners explores.
Download the report on London's global tech ecosystem
Pulling its weight
London was just $200M shy of its 2019 all time investment high, and contributed almost a quarter of Europe’s $43.1bn VC total in 2020. The city was the second fastest-growing mature tech hub in the world from 2016 to 2020 and ranks 5th worldwide for VC investment over the past five years. The London success stories that have been realised in the last few years have helped fuel a self-reinforcing ecosystem of recycled talent and capital. But they also helped grab the attention of the international tech industry – that something’s going on in Europe – and consistent 11-figure funding figures do no harm either.
Europe’s Venture Capital market is disproportionately based in London, and record levels of new funds raised by London-based VCs will be good news for UK and European startups in the years to come. London VC firms raised $7.8bn in new funds in 2020, on top of the $4bn raised in 2019 – accounting for a third of all new European VC funds raised in the last two years. London-based startups succeed in attracting a much higher proportion of international capital their their European peers, but UK VCs also look beyond their own borders. London startups and venture funds successes in attracting capital bode well for London and the broader European tech ecosystem.
Passion Capital partner Eileen Burbidge said “The outlook for London as a global investment hub remains positive. With world class tech talent and sector expertise, London is home to an abundance of innovative entrepreneurs and startups for investors and on-going value accretion. It’s also promising that London tech companies are attracting a greater mixture of early and later stage found rounds – This is a clear sign that London’s tech sector will continue to compete and be a leader on the global stage.”
London is renowned for its fintech prowess. The sector has produced the bulk (18) of London’s unicorns (43), and attracts half of all European fintech investment. Just this week Rapyd raised $300M Series D and Checkout.com announced $450M Series C at a colossal $15B valuation – rounds that would have been unimaginable announced inside 24 hours.
In 2020 London fintech startups raised $4.3bn, including: KI Insurance ($500m), Checkout.com ($150m) and GoCardless ($95m). Over the past five years London fintech companies have raised $15.4bn in funding.
But just as London excels at more than finance, there’s more to London tech than fintech.
In 2020, London enterprise software investment increased 82% to $1.8bn. Investment into London’s healthtech companies also remained strong, with significant rounds for Babylon Health ($100m), COMPASS Pathways ($80m) and Cera ($75m), and investment in London’s transport startups has grown 7.5x in 5 years, led by Arrival and Cazoo in 2020.
London evolution from novelty tech hub to unicorn factory is complete. It may have been Europe’s first global tech success, but it’s not the last.