London leads Europe but dwarfed by US tech hubs for venture capital investment

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Photo: pcruciatti|shutterstock.com

London enjoys a reputation as a dynamic home to business start-ups, particularly in the technology sector. But while the city may be leading Europe it accounts for just 2% of global capital investment funding.

Data gathered by the Martin Prosperity Institute at the University of Toronto’s School of Management shows that the start-up sector was powered by $42 billion of venture capital investment in 2012 – the most recent available data. London attracted $842 million.

While venture capital investment is becoming more global, the sector is still dominated by the US with cities and metro areas on both the East and West coasts attracting 70% of funding. The San Francisco Bay area, which includes Silicon Valley, attracts a larger proportion than either Europe or Asia.

Amid this US dominance, London is ranked 7th in the list of venture capital investment put together by the Instiitute. Beijing is the only other non-US city in the top 10.

City/Metro area
Venture Capital Investment
(US millon dollars)
Share
1 San Francisco £6,471 15.4%
2 San Jose $4,175 9.9%
3 Boston $3,144 7.5%
4 New York $2,106 5%
5 Los Angeles $1,450 3.4%
6 San Diego $1,410 3.3%
7 London $842 2%
8 Washington DC $835 2%
9 Beijing $758 1.8%
10 Seattle $727 1.7%

London fares quite well in these rankings because it is a large and dynamic city. The growing mega cities of China and India have a similar advantage. But London fares less well when investment is considered on a per capita basis. London then slips to 39th in the global rankings with around $60 per head. In San Jose it is more that $2,000 and many smaller US cities jump into the top 20.

London also falls behind some other UK and European cities in the par capita calculations.  Edinburgh, Bristol and Liverpool have all succeeded in attracting more venture capital per head of population.  But their populations and total investments are a fraction of size of London.

The UK capital still dominates Europe for total investment with Paris trailing in second with $449 million.  While there is a greater global spread of money the bulk is still concentrated on large urban centres, and that will continue to be to London’s advantage.

Source data

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London leads Europe but lags behind US as tech start up base, says survey

town hall and tower bridgeLondon emerges as Europe’s leading tech start-up hub but Silicon Roundabout is still well behind Silicon Valley, according to a survey by a business software company.

The Global Start Up Ecosystem Ranking looked at 5 measurements for a successful start-up hub – performance, funding, talent, market reach and the start-up experience. Compass, a company that sells tools for automated management reports and benchmarking carried out the survey following on from a similar study in 2012.

11,000 people in the start-up sector took part and Compass additionally conducted 200 interviews in 25 countries.

The rankings were dominated by the US with the top 4 places and 6 in the top 10. London ranked in 6th place, up one position from the last such ranking in 2012. Berlin is hot on its heels for the crown of leading European city jumping 6 places to 9th.

 

Global Start Up Econ-System Ranking 2015
Ranking Location Performance Funding Talent Market Reach Experience
1 Silicon Valley 1 1 4 1 1
2 New York 2 2 1 9 4
3 Los Angeles 4 4 2 10 5
4 Boston 3 3 7 12 7
5 Tel Aviv 6 5 13 3 6
6 London 5 10 3 7 13
7 Chicago 8 12 5 11 14
8 Seattle 12 11 12 4 3
9 Berlin 7 8 19 8 8
10 Singapore 11 9 9 20 9

The fatal flaw in the survey rankings and one that would inevitably knock London down the list is that China, Japan, South Korea and Taiwan are not included. Compass says that is was unable to get adequate survey participation or data. It would expect to see Beijing in the top 5.

The survey shows that London scored best for availability and cost of technical talent. It also did well in measurement of performance. The survey says that exit values on London start-ups have gone up 4-fold in the last 2 years.

The survey produced a few findings that may have particular relevance for London as a global capital. 27% of start-ups have investors from abroad, and 29% of people working in start-ups were foreigners to their chosen city.

There was a lack of gender equality in all locations. 18% of start-up have female founders compared to 10% in the survey done in 2012. Separate research, previously reported by Urbs, suggests that this in one area where London is doing better than Silicon Valley.

Source – Compass Global Startup Ecosystem Ranking

See also

London wins plaudits for support of tech sector growth.

Tech start ups more diverse than Silicon Valley but women struggle for funding

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Tech start ups more diverse than Silicon Valley but women struggle for funding

Photo: Old Street roundabout - Old Street roundabout┃Jack Torcello via Wikimedia Commons

Photo: Old Street roundabout┃Jack Torcello via Wikimedia Commons

Silicon Valley may sound a lot hipper than Silicon Roundabout but London’s tech sector is doing better when it comes to diversity than its Californian cousin.

A survey of tech start ups in the UK found that those in London had 26% women compared to 10% in Silicon Valley and 9% in the Israeli tech hub in Tel Aviv. But while women are better represented, including at executive level, the study found a clear gender bias in funding.

Men were 86% more likely than women to get venture capital funding and 59% more likely to get a cash injection from an angel investor. Women are far more likely to be self-funded.

The StartupDNA research was commissioned by the start up accelerator Wayra, which is owned by Telefonica. It also found that the London start up scene is more ethnically diverse than the US. London start ups taking part in the survey were 20.7% BAME (Black, Asian and Minority Ethnic), a little better than the 18% recorded in California. The London figure includes a higher representation of black people and other minority ethnic groups.

241 individuals at 222 companies across the UK took part in the research by completing questionnaires. A little more than two thirds of them were in London. Start ups in the capital were younger than the rest of the country – 70% more likely to attract those under 35.

The diverse nature of the London population was also evident in these aspirant tech giants. London firms were over 40% more likely to attract staff from countries in European Economic Area and beyond than those across the UK generally. London tech start up people were also 50% more likely to speak another language.

Source data

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