The UK has created 63 tech unicorns in the past decade (according to Dealroom), and it almost goes without saying that the vast majority of those companies were based out of London, the country’s largest tech hub.
Famously, London’s DeepMind, an AI startup, was acquired by Google in 2014 for $500 million, but it has resolutely refused to move to Silicon Valley; founder Demis Hassabis says the city’s diversity of talent meant the powerhouse needed to stay put.
London has produced fintech upstarts like Revolut, Monzo and Starling and attracted early Skype team members who went on to create TransferWise. In 2019, London’s startups received $9.7 billion in venture capital funding, more than Berlin, Paris, Amsterdam and Madrid combined.
Furthermore, last year Pitchbook found that up to $4.4 billion worth of deals had involved at least one U.S.-based investor, with London receiving over $12.5 billion from American investors in the previous five years – almost twice as much as Berlin (on $6.5 billion of investment from U.S. VC firms).
Brexit uncertainty may impact startups’ ability to recruit and sale, and the UK government’s points-based system for immigration is unlikely to satisfy the industry’s voracious appetite for talent. But London is a tech supertanker that other European cities are unlikely to be able to match any time soon, Brexit or no Brexit.
But in the era of COVID-19, will major hubs like London still be able to attract future tech unicorns, and will these be in the same sectors as before? Will geography be replaced by mere time zones?
We surveyed many of London’s top VCs to get their insights. Here’s who we heard from:
- Ruth Foxe-Blader, partner, Anthemis Capital
- Yana Abramova, partner, Pretiosum Capital
- Leila Zegna, co-founding partner, Kindred Capital
- Rob Moffat, partner, Balderton Capital
- Nic Brisbourne, managing partner, Forward Partners
- Sean Seton-Rogers, general partner, PROfounders Capital
- Simon Murdoch, managing partner, Episode 1 Ventures
- Nenad Marovac, founder and managing partner, DN Capital
- Andrei Brasoveanu, partner, Accel Partners
- Jan Lynn-Matern, founder and partner, Emerge Education
- Rob Kniaz, founding partner, Hoxton Ventures
- Harry Briggs, partner, OMERS Ventures
- Hussein Kanji, partner, Hoxton Ventures
- Eileen Burbidge, partner, Passion Capital
Ruth Foxe-Blader, Anthemis Capital
How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?
Neither our investment thesis, nor our geographic focus has changed: we are a global investor, focused on the US, UK and Europe. We are filtering, even more, for the best founders, as geography feels less important in lockdown.
From that, what do you expect to happen to the startup climate in London longer term, with the shift to more remote work (post COVID-19), possibly from more remote areas. Will London stay a tech hub or will the ecosystem become more dispersed across the country?
As a global financial hub with substantial infrastructure (including capital) designed to support emerging technology, London will remain a critical node in the fintech ecosystem.
Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?
We’re anticipating a pretty substantial change to working norms, at least over the near term (6-12 months). The long-term impact is likely to level the playing field for great founders operating outside of established tech hubs. Remote assessment of companies, while challenging, has the potential to create more equitable investment practices.
From that, what do you expect to happen to the startup climate in London longer term, with the shift to more remote work (post COVID-19), possibly from more remote areas. Will London stay a tech hub or will the ecosystem become more dispersed across the country?
As a global financial hub with substantial infrastructure (including capital) designed to support emerging technology, London will remain a critical node in the fintech ecosystem.
Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?
To the extent that culture, regulation and capital play a large role in favoring certain types of economic activity, I expect existing tech hubs to remain important bastions of innovation. That said, I think we will see the rise of complementary tech hubs, as well as teams “in the middle of nowhere” emboldened to start great companies.
Are there particular industry sectors that you expect to do uniquely well or poorly, locally?
Given the proximity to the City and the heritage in financial technology innovation, the London tech ecosystem will continue to produce great fintech and insurtech companies.
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