There is no doubt, London is an extraordinary place for startup development. It is the leading startup hub in Europe and the third-largest in the world. Known for its vibrant community, the city also tops in world-class universities and a diverse pool of international talents.
Grown eight times!
According to the latest data from London & Partners and Dealroom.co, London is cementing itself as a top global hub for impact tech. The VC investment into the city’s Impact tech companies has grown almost 800% (7.8 times) since 2015, compared to 3.1 times in Europe as a whole.
In 2020, London’s impact tech companies received $1.2B (approx €1B) in VC investment from January to October, already matching 2019 levels. So far, London’s impact firms have secured 429 deals between 2015 and 2020, more than any other city globally, claims the report.
Deputy Mayor for Business, Rajesh Agrawal, says, “London is a global hub for tech and innovation – these findings show that our city has quickly become a global leader for start-ups aimed at tackling some of the most pressing challenges we face as a city and as a country. As we recover from the impact of the Covid-19 pandemic, we have the opportunity to help build a greener, fairer, and more inclusive city – and clearly, London’s dynamic tech sector has a critical role to play.”
Global impact investment increased by 280%
As startups across the world continue to tackle various issues such as the climate crisis and social inequality, investors are increasingly looking to invest money into purpose-driven tech solutions.
In general, an impact startup refers to any company addressing one or more of the 17 UN’s Sustainable Development Goals (SDG), including climate action, clean energy, gender equality, and zero hunger. The data reveals that there is a 280% increase in global VC investment in impact tech companies from 2015 to 2020.
San-Francisco leads globally
The report says the capital of England is home to the largest impact tech cluster in the world. It has produced 241 impact startups since 2006, compared to 95 companies founded in San Francisco, 132 in Berlin, and 129 in Stockholm.
Also, the London companies attracted 14.9% of overall VC investment into the city this year, larger than any city. However, San-Francisco leads the chart in terms of global investment with $1.8B (approx €1.5B) VC investment into its impact startups, followed by Shanghai’s $1.5B (approx €1.27B) and London with $1.2B (approx €1B).
The report also adds that the United States received more VC funding for impact tech companies than any other country in the past five years, at a national level, with investors pumping $35.8B (approx €30.3B) into US firms since 2015.
London ties Shanghai and Paris with four impact unicorn companies
At present, there are four impact unicorns in the city, with three added this year alone – Octopus Energy, Arrival, and Gousto. Babylon Health is another impact unicorn company. In this regard, San Francisco leads with seven impact unicorns, while London is tied-up with Shanghai and Paris with four impact unicorns each.
The three new impact unicorn companies are also amongst the biggest funding rounds into London’s impact startups in 2020 so far, with Octopus Energy closing a $360M (approx €304M) funding round in April, and Arrival securing $103M (approx €87.2M) in January, followed by another $118M (approx €100M) round last month.
Other major funding rounds include $70M (approx €60M) Series B for Cera, a startup providing home care for the elderly, and an $80M (approx €67M) Series B round for mental health care company, COMPASS Pathways.
Climate change and clean energy attracted more interest
The impact companies tackling climate change and clean energy have attracted the most interest from investors over the last five years, making up 53% of overall VC investment. Furthermore, the report adds that investors from North America have steadily increased YoY, besides European investors as well.
Funding rounds, including at least one North American investor, have made up $234M (approx €198M) of VC investment so far this year, up from $85M (approx €72M) in 2018, and equating to a fifth of all VC investment into London’s impact startups.
The increase in VC investment into London’s impact companies indicates that increasing interest from international investors is likely to continue over the next few years.
The United States is also a key market for London-based impact firms looking at international expansion. Similarly, San-Francisco’s impact startups look across the Atlantic to London for their international expansion plans.
The new data is released to coincide with the four-day SVC2UK virtual event programme this week, bringing together global tech leaders from around the world to foster an inclusive and diverse network of entrepreneurs and inspire the next generation of innovators.
London & Partners is a not-for-profit public-private partnership, funded by the Mayor of London and our network of commercial partners. It is London’s international trade, investment and promotion agency. Its purpose is to support the Mayor’s priorities by promoting London as the best city in the world in which to invest, work, study and visit.
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