London tech startups raise $10bn despite pandemic

Kumutha Ramanathan
·2 min read
London, United kingdom - November 11, 2012: Cyclist passes Silicon Roundabout, High-technology business district, London.
A cyclist passes Silicon Roundabout, London's technology business district. (Source: Getty Creative)

London tech firms have succeeded in raising $10.5bn (£7.59bn) in venture capital investment in 2020 despite the global COVID-19 pandemic and Brexit.

That’s according to research conducted by Dealroom for marketing and promotional agency London & Partners. The strong investment performance has set a new record for the UK and European technology sector.

London firms, in particular, have raised three times more funding than Paris, Berlin, Stockholm or any other European city last year. It has also already recorded new venture capital firms that are available to deploy in 2021.

“London is the global tech capital of Europe,” said Sadiq Khan, mayor of London. “Despite the challenges brought about by Brexit and the coronavirus pandemic, London’s tech sector continued to thrive in 2020 and has an important role to play in the city’s economic recovery.

“London is already home to some of the world’s best technology companies and will remain open to international investment and tech talent from all over the world.”

Watch: Will Interest rates stay low forever?

READ MORE: Bank of England's Broadbent: Furlough is no 'free lunch'

Global tech investment was quite resilient in 2020 as well, with companies receiving a total of $272.3bn investment last year, surpassing the total raised in 2019, which was $262.7bn.

Further, London is producing some of the world’s fastest growing tech companies, according to Dealroom’s research, which shows 81 “potential future unicorns” headquartered in the capital, compared to 42 in Paris and and 32 in Berlin.

London has gained a reputation as a unicorn capital due to increased access to later-stage funding, said Dealroom, with the data showing a significant increase in the availability of capital for $250m+ funding from $1.8bn in 2019 compared to $5bn in 2020.

“We deliberately set up our headquarters in London - Europe's tech hub - because it gives us access to like-minded tech innovators and world-class talent,” said Greg Jackson, chief executive and founder of the London-based energy tech unicorn Octopus Energy.

“This innovative tech ecosystem is also the reason why we believe the UK has got what it takes to become the 'Silicon Valley of Energy', driving the tech-led green energy revolution globally.

The tech sector’s gains in 2020 and this year stand in stark contrast to its peers in other industries, such as retail. It has been hard hit by COVID-19 restrictions and Brexit uncertainty.

In 2020, the same year tech firms were acquiring millions in funding, a number of companies went into administration due to a massive drop in sales and demand as shopping footfall was scaled back by COVID-19 restrictions, including at Bonmarche and Debenhams.

Watch: What does a Joe Biden presidency mean for the global economy?