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Written by Julian Blake, Director of Digital Agenda

Despite a big dip in year-on-year investment and the uncertainties of Brexit, the UK and London continue to dominate the European tech investment landscape, new data shows this week. UK tech attracted more venture capital and produced more share-listing IPOs in 2018 than any other Euro hub.

London-based tech businesses receive almost twice the growth capital of other European cities, including Paris, Berlin and Stockholm, end-of-year investment data from the mayor of London’s promotional agency London & Partners shows.

Despite the continued dominance of London and the UK, the survey also shows that UK VC investment fell by 20% between 2017 and 2018, from £3.12bn to £2.49bn. In London the figure dropped by 29% from £2.53bn to £1.8bn. 2017 saw UK tech VC double year on year, with a 30% jump in London caused by big deals for the likes of Deliveroo and Improbable.

Paris, by contrast, gained momentum year on year, with French tech firms raising over £1bn in 2018 compared with £748m in 2017. Total Euro VC tech funding in 2018 was broadly similar to 2017 at £10.44bn, compared to £10.47bn the year before.

L&P’s annual survey, drawn from investment data platform PitchBook, shows that more than £7 in every £10 raised by UK tech goes to London, with the capital’s tech firms receiving £1.8bn (72%) of the total £2.49bn raised by UK tech business.

L&P says that long-term growth prospects for London’s digital economy remain strong, with further analysis showing that international investors are backing the capital’s fastest-growing sectors. Big data, artificial intelligence and blockchain all saw record levels of funding in 2018.

Investment into the UK’s AI companies peaked at £736m in 2018, representing a 47% increase on the £499m raised in 2017. These figures were boosted by larger deals, including a £58.86m series B round for London-based online travel firm Culture Trip, using AI to tailor user content, and a £153m series D round for AI chipmaker Graphcore. Blockchain deals included £61m in later-stage funding for Bitfury and a £12m series A round for TradeIX.

The UK’s booming fintech sector continues to be a major draw for investors, with London-based fintech firms reaching unicorn status including Monzo (funded with £84m) and Revolut (£177m).

The strength of London and UK tech was boosted by the high number of tech exits in 2018, with more IPOs for UK tech companies than any other Euro hub. 2018 saw 17 exits from UK-based tech companies, including high-profile IPOs for London-based fashion ecommerce firm Farfetch and peer-to-peer lending company Funding Circle. Sweden was second with 10 tech IPOs, followed by France (eight) and Germany (six).

London & Partners chief executive Laura Citron said: “2018 was another great year for investment into London’s tech sector and today’s figures demonstrate that London is place where ambitious, international companies can thrive. With high levels of investment for growth sectors such as artificial intelligence, fintech and big data, our research shows that London is producing game-changing companies and ideas to change the world.”

Revolut chief executive Nikolay Storonsky said: “London provides you with access to some of the world’s best tech talent, investment and expertise you need to grow your business. London is also a global hub for fintech, making it a great place for us to expand into overseas markets.”

Ben Brabyn, head of fintech incubator Level39, said: “Investment and growth capital is still flowing into London, and across the UK, moving with grim determination against the prevailing winds of Brexit-induced uncertainty and alarm. At Canary Wharf, we host more than 200 tech startups and scaleups, and one tech unicorn in Revolut. Their successes are a reminder that innovation and entrepreneurship will continue to flourish in the face of uncertainty.”

Octopus Ventures chief executive Alliott Cole warned that “we must continue to provide the funding, talent and infrastructure that will enable home-grown businesses to build on the UK’s position as a market leader in growing companies that can truly change the world. When looking at the future of money, the future of industry and the future of healthcare, the opportunity for the creation of extraordinary businesses has never been stronger.”

Top Euro tech cities 2018

London £1.8bn
Berlin £936.53m
Paris £797.04m
Stockholm £224.23m
Barcelona £182.74m
Amsterdam £163.51m
Zurich £156.97m
Copenhagen £111.37m
Dublin £104.13m
Cambridge £97.2m

European VC tech funding 2018

UK £2.49bn
Germany £1.38bn
France £1.03bn
Switzerland £531.8m
Spain £275.05m
Sweden £268.44m
Netherlands £199.09m
Denmark £122.54m
Ireland £110.76m
Finland £89.66m

Top IPO nations 2018

UK 17 (£1.3bn)
France 8 (£148.28m)
Germany 6 (£260.56m)
Italy 3 (£17.57m)
Netherlands 2 (£820.56m)
Sweden 2 (£6.61bn)
Switzerland 1 (£24m)

All data from PitchBook

Originally posted here

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