Investors have pumped a record £1bn into London’s thriving tech sector this year as the capital’s digital economy rockets, with experts predicting that the capital could soon be on course to challenge Silicon Valley.
Data from London & Partners, the mayor’s investment company, shows that London’s technology companies have raked in three-quarters of the UK total of £1.4bn.
The nationwide figure eclipses the £1.3bn raised in the whole of 2014 and is 10 times the money raised in 2010.
Nick Hungerford, founding chief executive and director of online investment manager Nutmeg, told City A.M. that London is “catching up with Silicon Valley” and has the potential to become the biggest tech hub in the world.
Read more: FinTech powerlist 2015
He said: “It’s moving faster and it will get there. We have the natural resources to be the biggest tech hub in the world, from the language and time-zone to the diversity of talent. The capital is all that is lacking at the moment, and we’ll start to discover more Facebooks and Googles if we have the big funds to invest in them here.”
Four companies account for 50 per cent of the total amount raised in London this quarter. Deliveroo raised £45m, MADE.com attracted £39m, Secret Escapes also received £39m and Prodigy Finance managed £12.75m.
The capital’s FinTech sector alone has attracted a total of £362m of investment this year, already surpassing 2014’s total of £318m.
Eileen Burbidge, partner at Passion Capital, said: “In little more than five years, we have seen investment in London’s tech sector increase tenfold. Today’s figures and the fact that London is home to more software developers than anywhere else in the world validate the fact that London’s tech sector is maturing and is one of the world's leading tech hubs.”
However, home secretary Theresa May’s hard line on immigration and international students has raised fears that tech growth could be curtailed.
Russ Shaw, founder of Tech London Advocates and mayor of London tech ambassador, told City A.M.: “These companies are attracting investment so they can hire world-class talent to build up a globally competitive business. If we don’t take foreign students seriously, as part of an overall talent mix, it will impact our ability to attract world class talent and build world-class businesses. It's a mistake to send them home.”
The booming digital economy means that Britain will need 2.2m digitally skilled workers by 2020 to satisfy its digital potential, according to new research from O2. It also suggests that 47 per cent of the 766,000 digital and tech jobs created over the next five years will be in London and the south east.