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With a 66 per cent year-on-year growth, tech firms in London received more than $682m worth of VC funding during the three months of 2015. It beats the previous record of $411.6m, which was achieved in Q4 2014.
The details showed that London is by far and away the nationwide leader when it comes to securing investment, accounting for 80 per cent of the total $856.7m raised by businesses across the UK.
Even the Silicon Valley-based firm Andreessen Horowitz has been keen to embrace UK tech talent, backing online payments service TransferWise with $58m in January and more recently funding virtual world gaming company Improbable with $20m in March.
Eileen Burbidge, London technology ambassador and partner at Passion Capital, which invests in technology startups, said: “London is one of the most electrifying tech hubs in the world, with companies and investors all brought here by the city’s ideas and entrepreneurial spirit, as well as its talent and access to markets.”
Moves like this make it clear that the focus on London is unlikely to abate any time soon – if at all. However, there have been significant moves from regions outside of the city that are looking to repeat the success of London and Cambridge is one such focal point.
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Just 60 miles outside of London with fresher air and picturesque views, Cambridgeshire secured the attention of Virgin Media Business in March, having aligned with the local council to connect the city to free wi-fi. The scheme is designed to provide businesses, locals and visitors alike with internet access, in a move to recognise Cambridge as “a true pioneer of the next generation of connected cities.”
“Cambridgeshire has always been at the forefront of new technology and evolving the way we interact with the world,” said Noelle Godfrey, programme director for the Connecting Cambridgeshire programme.
Infrastructure is one thing, but you still need the talent and a nurturing environment to support them. “To have a startup culture, it’s not just about the entrepreneur, it’s about the ecosystem and that’s one thing we’ve learned from Silicon Valley – it’s about having all of the elements come together,” Google advisor Jack Hidary told Real Business.
“Yes, you need entrepreneurs who are passionate and excited about their idea, but we also need the supporting actors of law firms; ones that will not charge through the roof for a startup to get their business going. Having universities participate in the culture is critical – at Cambridge University [we have] had sessions there with students and startups.”
The discussion had was on the topic of the UK versus the US, but with London absorbing so much investment and attention – is a UK versus London scenario now on our hands?
If that’s the case, companies outside of London wanting to gain more presence could adopt American entrepreneurial traits that aren’t commonly used by Brits – aggression and paranoia.
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“American companies are very aggressive in their effort to go and dominate their sector because they know the number one in the sector tends to monopolise the capital and attention in the space – it sucks up the air in the room. Uber is one example of that that and has quickly left its rivals behind and has dominated the capital markets for the mobility service, and the press as well,” Hidary added.
“I find that some UK companies may not be as paranoid as I am as a US entrepreneur in terms of wanting to quickly dominate the sector.”
Another reason London thrives in terms of talent is a higher salary, which companies outside of the city have also been trying to replicate in order to attract IT talent. Again using Cambridge as an example, the average salary is £41,000 for a development role in the city, the highest behind London’s £51,600.
However, progress is being made. Boris Johnson announced in February that American investors have funded more British tech businesses in 2014 than ever before with $1.35bn – though London still secured a majority $795.2m.
Elsewhere, Digital Catapult has promised a £9m investment to open digital innovation centres across the UK, supporting tech-savvy entrepreneurs in Brighton, Yorkshire and North East & Tees Valley.
In addition to Hidary’s tips for aggression and paranoia, outer London tech companies can even look at London-based rivals as a source of inspiration. Other companies to have secured funding during Q1 2015, included $45m for augmented reality firm Blippar and $30m for Shazam, which was valued at $1bn alongside the investment, while it has backed the support of teenage entrepreneurs with Young Founders.
Ambarish Mitra, CEO and co-founder of Blippar, said: “We have found London to be the perfect location from which to grow our global technology business – well on our way to a multi billion-dollar valuation. The city has been a springboard for Blippar to open 10 offices in 6 countries and grow threefold year-on-year since we started 3.5 years back.
“We’ve recently raised $45m in Series C funding, which will further accelerate our breakthrough in technology and our fast growth. We have enjoyed great support from the British government throughout our rapid global ascent to date and give credit to them for introducing policies favourable for British tech startups.”
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