By Daniel Lanyon on Friday 15 January 2021
It was a record year for UK and European tech VC investment in 2020 with fintech, in particular, boosting London's fortunes.
London’s tech startups pulled in $10.5bn last year accounting for nearly a quarter of all cash raised from venture capital in Europe, according to a new report.
The numbers were boosted by a number of mega funding rounds, deals such as a $500m Series D funding round for Revolut, which helped British tech firms raise a record $15bn in 2020 in total.
Of the money raised by London startups, 41 per cent went to fintech firms ($4.3bn) making up nearly half of all the fintech capital raised across Europe in 2020.
While the figures demonstrate the robustness of London’s fintech industry, the figure is just over a fifth smaller (22 per cent) than in 2019, when $5.5bn was raised.
Berlin saw the biggest drop in fintech funding out of any major European city with a 60 per cent fall from $1.3bn to $0.6bn.
Amsterdam saw the biggest increase, albeit from a low base of $100m in 2019 to $200m.
Despite the global pandemic and the UK’s exit from the European Union, London tech firms raised significantly more in 2020 more than the total amount raised in 2017 ($7bn) and 2018 ($5.9bn) and close to 2019’s record ($10.7bn).
Global investors are also increasingly pumping money into London tech companies, with non-European investors accounting for over half (57 per cent) of all tech VC investment into London over the past two years.
London is now home to 1,252 VC firms – more than any other European city. 2020 saw a number of global investment firms increase their presence in London with Index Ventures ($2bn fund) and Atomico ($830m fund) announcing new funds for European start-ups based in London and the news that Silicon Valley based VC Sequoia Capital has expanded its footprint in the UK capital. In 2020, the UK capital attracted a higher percentage of non -European investment than any other European tech hub.
Ian Connatty, Managing Director of British Patient Capital UK venture and venture growth capital markets are maturing, driven by strong long-term fundamentals in UK tech and life sciences.
“The amount of international investment, particularly in larger, later stage deals indicates the direction of travel for the UK and European asset class. We expect to see institutional investors, including British Patient Capital, paying increasing attention to UK venture growth, funds that invest at series B and beyond, in the coming years,” he said.