Booming London technology sector attracts record funding from US
American investors are putting more money into London-based technology companies than ever before, according to new figures to be revealed by the Mayor of London today (11 February). He will reveal the figures while on a trade mission to the United States aimed at strengthening economic and cultural ties between London and the US.
New figures compiled by London & Partners, the Mayor’s promotional company for the capital, show that London-based tech firms attracted $795.2m from US investors in 2014, more than doubling the previous record figure from 2012 of $296m. Investment from the US into the UK as a whole also set a new record of $1.35 billion, compared to the previous record of $582m received in 2012.¹
In total, London firms attracted $1.4 billion in venture capital funding in 2014, meaning that US funds were responsible for over half of all new funding received by the city’s tech sector. The figures will be revealed by the Mayor of London at an event in New York for potential investors hosted by London & Partners, in association with Tech City UK and the Technology is GREAT campaign.
The Mayor of London, Boris Johnson, said: “As the digital capital of Europe, London is clearly the place to create fast-growing tech companies, and our flourishing tech sector has caught the eye of US investors. London’s talent is attracting global investment, enabling our innovators to turn their ideas into companies that create jobs and economic growth in London.”
The Mayor is on a six-day visit to the US East Coast aimed at strengthening ties between London and the US. Twenty-two of London’s leading financial technology firms are currently in New York on a trade mission organised as part of the Mayor’s Export Programme and they will use today’s event to pitch to the investors in the room in the hope of winning new deals for London.
2015 has already seen further major investment from the US into London. Financial technology company TransferWise recently announced $58m of new investment from Silicon Valley investment firm Andreessen Horowitz, while music tech company Shazam recently announced new investment of around $30m, valuing the company at over $1bn.
Several further funding announcements are also set to be confirmed today and the Mayor will tell investors attending the event in New York that TransferWise is to open offices in New York and Tampa, Florida, which will employ around 50 people. The company’s New York office will contain marketing and product teams, and Tampa will have localised customer support and operations teams.
Taavet Hinrikus, co-founder of TransferWise, said: “London has been a great place to start and grow our business. Its status as both a tech and financial hub means we've been able to grow the company from just my co-founder and I to a company of 250 employees, processing over £3bn worth of customers' money in four years. We're fortunate to have raised money from some incredible US investors, including Peter Thiel's Valar Ventures, IA Ventures and Andreessen Horowitz. We're excited to be opening offices in the US this month."
The Mayor will also reveal that London-based Digital Shadows, which provides a cyber-threat intelligence service that helps companies discover sensitive data exposed through social media, cloud services and mobile devices, has attracted $8m of new venture capital funding, led by US West Coast firm Storm Ventures. The proceeds will grow the company’s London team further and to set up sales, marketing and operations offices in New York and San Francisco.
Alastair Paterson, CEO of Digital Shadows, said: “The potential of Digital Shadows has been recognised by investors both in the UK and US, as indicated by the new funding round. We will use this as a springboard to scale up Digital Shadows in order to reach new markets. We have been able to grow from a London-based start-up into a company that is now taking on global challenges in cybersecurity. London clearly has the infrastructure in place to allow other companies to follow in our footsteps and expand into global markets.”
Baroness Joanna Shields, Digital Economy Adviser to the Prime Minister and Chair of Tech City UK, said: “There’s nowhere better in the world than the UK for technology companies to expand internationally. Companies like Box have already benefitted from our substantial capital, cutting-edge infrastructure and world-class workforce. Our digital economy has all the right conditions to help fast-growing technology companies thrive on a global scale. For those that are ready to expand their footprint, now is the time to make the move.”
Gordon Innes, Chief Executive of London & Partners, the Mayor’s promotional company for London, said: “As the world’s leading financial centres, London and New York are also leading developments in technology, in particular financial technology. The proximity of our world-class financial services infrastructure to London’s booming tech industry is driving innovation across mobile payments, retail banking and crowdfunding, resulting in dynamic products and apps for a plugged-in, online generation, and a similar story is playing out in New York. It makes sense for our two cities to collaborate further, bringing the next generation of financial products to market.”
Speakers at the NYC event include:
- Arianna Huffington, Chair, President and Editor-in-Chief of the Huffington Post Media Group
- Omar Tayeb, CTO and founder of London-based augmented reality firm Blippar. Since launching in the UK, the company has expanded quickly (from 40 staff in January 2014 to 200 today) and has a New York office with 40 employees as well as other offices in San Francisco, Los Angeles and Chicago
- Fred Destin, Partner, Accel Partners. Mr Destin is a well-known tech VC who recently moved back to London from Boston.
Fred Destin, Partner, Accel Partners, said: “London is undoubtedly one of the world's great tech hubs. Since Accel opened here in 2000, we have seen the local ecosystem flourish and go from strength to strength. Today, we are seeing and investing in world-class British start-ups across a wide range of sectors, from consumer marketplaces and financial services to software-as-a-service (SaaS). London entrepreneurs are building technology leaders of global significance.”
Other announcements to be made at the event include:
- London-based marketing engagement company EngageSciences will announce it has won new clients, including US media company Scripps Networks Interactive. The company’s success in attracting US clients and growth over the last year has enabled it to open a second office in Silicon Beach, California, in addition to its office in New York
- London tech community Chinwag is launching Pitch NYC (http://pitch-nyc.com), a twice-yearly pitch event in New York to introduce the leading fast-growth UK startups to NYC investors.
The Mayor of London will also use the event to demonstrate some exciting new technology developed by the London-based start-up SAM Labs. Racing models of London and NYC’s world-famous cabs towards an iconic Tower Bridge finish line, the two will help London-based firm SAM Labs demonstrate the innovative products they are pitching to the US market.
SAM building blocks wirelessly connect to your computer to build Internet of Things devices, allowing people with no understanding of coding to construct moving machines. Using small wireless computer components such as switches, fans and motors, SAM teaches people young and old how build innovative electronic systems using a simple computer programme.