Global tech investors continue to put their faith in London, with latest end-of-year VC investment figures from Dealroom and London & Partners showing that the UK capital’s tech rms raised an impressive $19.8bn last year. Despite a challenging economic climate, London’s tech firms raised double the amount of investment than any European city in 2022 and ranked fourth on the global stage.
London helped boost the total amount of VC funding secured by UK tech firms in 2022 to $29.9bn, making it the third largest country for tech investment behind the US and China.
According to the data, 2022 global VC funding experienced a 33% dip from the record levels seen in 2021, with a total $485.2bn raised last year, compared with $723bn the previous year. This trend was replicated at a European level, with a total of $94bn raised in 2022 – a 22% decline on the $120.8bn raised in 2021.
The future investment landscape for London and UK companies remains optimistic with further analysis from Dealroom revealing an increasing volume of growth capital being added by VCs to new funds in London.
The total amount of fresh capital raised by London-based VCs in 2022 was $6.6bn, more than any previous year. is takes the overall total raised in the past years (2021 and 2022) to $11.4bn.
Some of the world’s largest investment firms have established new funds or a presence in London in the past year. Significant new funds based out of London include a $1bn early-stage fund from Northzone, a $650m European investment fund from Atomico and a $500m fund from Phoenix Court, whose funds include LocalGlobe and Latitude. Additionally, the likes of Sequoia Capital, Lightspeed Ventures and General Catalyst have all recently expanded their presence in the UK capital.
Strong performance for high growth sectors
A number of London’s fastest growing tech sectors managed to buck the overall downward funding trends in 2022, with over 10 different sub-sectors raising over $500m.
According to the data from Dealroom, London’s edtech, cyber security and gaming sectors all raised more funding in 2022 than 2021. Major funding rounds in these areas included: a $220m Series D round for London-based edtech provider Multiverse and a $112m investment into immersive and gaming company, Improbable.
London’s fintech sector also saw a strong performance in 2022, with the UK capital’s fintech firms raising a total of $9.7bn – more than any other city globally. In addition to seeing more investment than the likes of New York and the Bay Area, London fintech’s accounted for 42% of the total funding into all European fintech last year.
Another sector showing promising signs of future growth for London is impact tech – companies that put at least one of the UN’s sustainable development goals at the heart of their mission.
London’s impact tech companies raised over $2bn in VC funding last year and now account for more than 10% of all London VC funding for the first time.
The city’s climate tech companies were a big driver of that growth, with London climate tech businesses raising $1.5bn, up by 17 times in the past five years and more than any other year except for 2021 ($1.9bn). These numbers include a $135m founding round for vertical farming company, GrowUp farms and a $225m investment into renewable energy provider, Octopus Energy.
Laura Citron, CEO of London & Partners said:
“London‘s tech sector is looking resilient, despite the challenging context. Investors have raised more capital to deploy into high-growth companies than ever before. Innovation in London continues to be grounded in the city’s deep historic strengths – so we see sectors like fintech, edtech and gaming thrive. This data shows that London continues to be Europe’s tech capital and one of the best places in the world to scale a tech business.”
Julia Hawkins, partner at London-based VC firm, Phoenix Court, added:
“London is at the centre of a remarkable region of tech growth that spreads from the capital’s centre to other UK clusters including Manchester, Bristol, Oxford, Cambridge and beyond to Paris and Amsterdam. We expect some of the world’s biggest companies to be built from here in the next 20 years as the capital continues to attract significant investment thanks to its talent base and global leadership in fields such as life sciences, fintech and artificial intelligence.”
London & Partners is the business growth and destination agency for London, supporting the Mayor of London in promoting London internationally as a leading world city. Find out more at www.londonandpartners.com