London retains crown as Europe’s main hub for tech funding

Global tech traders proceed to place their religion in London, with newest finish of 12 months VC funding figures from Dealroom and London & Partners exhibiting that the UK capital’s tech companies raised a powerful $19.8bn final 12 months.

Despite a difficult financial local weather, London’s tech companies raised double the quantity of funding than any European metropolis in 2022 and ranked fourth on the worldwide stage.

London helped enhance the overall quantity of VC funding secured by UK tech companies in 2022 to $29.9bn, making it the third largest nation for tech funding behind the US and China. Some of the largest funding rounds into London firms final 12 months included: a $1bn Series D spherical for; a $312m Series G spherical for Go Cardless and a $200m Series D for Paddle.

According to the info, 2022 world VC funding skilled a 33% dip from the report ranges seen in 2021, with a complete $485.2bn raised final 12 months, in contrast with $723bn the earlier 12 months. This pattern was replicated at a European degree, with a complete of $94bn raised in 2022 – a 22% decline on the $120.8bn raised in 2021.

High ranges of dry powder increase in UK capital

The future funding panorama for London and UK firms stays optimistic with additional evaluation from Dealroom revealing an growing quantity of development capital being added by VCs to new funds in London.

The complete quantity of recent capital raised by London-based VCs in 2022 was $6.6bn, greater than any earlier 12 months. This takes the general complete raised up to now years (2021 and 2022) to $11.4bn.

Some of the world’s largest funding companies have established new funds or a presence in London up to now 12 months. Significant new funds primarily based out of London embody a $1bn early-stage fund from Northzone, a $650m European funding fund from Atomico and a $500m fund from Phoenix Court, whose funds embody LocalGlobe and Latitude. Additionally, the likes of Sequoia Capital, Lightspeed Ventures and General Catalyst have all not too long ago expanded their presence within the UK capital.

Strong efficiency for London’s excessive development sectors

Numerous London’s quickest rising tech sectors managed to buck the general downward funding traits in 2022, with over 10 totally different sub sectors elevating over $500m.

According to the info from Dealroom, London’s Edtech, Cybersecurity and gaming sectors all raised extra funding in 2022 than 2021. Major funding rounds in these areas included: a $220m Series D spherical for London-based EdTech supplier Multiverse and a $112m funding into immersive and gaming firm, Improbable.

London’s fintech sector additionally noticed a powerful efficiency in 2022, with the UK capital’s fintech companies elevating a complete of $9.7bn – greater than another metropolis globally. In addition to seeing extra funding than the likes of New York and the Bay Area, London fintech’s accounted for 42% of the overall funding into all European fintech final 12 months.

London exhibits development in impression tech funding

Another sector exhibiting promising indicators of future development for London is impression tech – firms that put not less than one of many UN’s sustainable growth targets on the coronary heart of their mission.

London’s impression tech firms raised over $2bn in VC funding final 12 months and now accounts for greater than 10% of all London VC funding for the primary time.

The metropolis’s local weather tech firms have been a giant driver of that development, with London local weather tech companies elevating $1.5bn, up by 17 occasions up to now 5 years and greater than another 12 months besides from 2021 ($1.9bn). These numbers embody a $135m founding spherical for vertical farming firm, GrowUp farms and a $225m funding into renewable vitality supplier, Octopus Energy.

Laura Citron, CEO of London & Partners mentioned: “London‘s tech sector is trying resilient, regardless of the difficult context. Investors have raised extra capital to deploy into high-growth firms than ever earlier than. Innovation in London continues to be grounded within the metropolis’s deep historic strengths – so we see sectors like Fintech, EdTech and gaming thrive. This knowledge exhibits that London continues to be Europe’s tech capital and among the best locations on the earth to scale a tech enterprise.”

Check Warner MBE, Partner, Ada Ventures, co-founder Diversity VC mentioned: “Even in a difficult macroeconomic local weather London’s place as a number one hub globally for tech funding stays unchallenged. Not solely that, however there are robust indicators that London will stay one of many main cities on the earth for know-how for many years to come back, with a report $6.6bn of VC raised by London-based VCs in 2022. With VCs and Limited Partners more and more centered on the significance of fine social, environmental credentials and powerful governance, London’s management within the impression funding area makes it arguably one of the best metropolis on the earth to start out and scale and impactful know-how firm. At Ada Ventures we’re excited concerning the alternative to put money into the improbable, mission pushed entrepreneurs who’re constructing their firms on this metropolis over time to come back.”



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