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

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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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