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Financial technology industry driving 'record high' VC investment in UK tech companies, says London promoter

Out-Law News | 03 Jul 2015 | 3:21 pm | 1 min. read

A "thriving" financial technology industry in London has helped the UK to secure a record level of venture capital (VC) investment into its technology companies, according to new figures published by the body responsible for promoting the UK capital.

London and Partners said $1.47 billion of VC investment was made into UK technology companies in the first six months of 2015, with $1.18bn of that amount being invested in London-based businesses.

In total, there were 227 VC investment deals struck in the UK technology sector in the first half of the year, with London companies benefiting in 158 of those deals, London & Partners said.

VC investment in London-based financial technology companies, including Funding Circle and Azimo, reached a total of $472m in the period, it said.

The level of VC investment in UK technology companies this year has risen compared to figures recorded in recent years, London & Partners said. London's technology sector is now attracting more than 10 times the level of VC investment than it did in 2010, it said.

"VC investment into UK tech firms during the first six months of 2015 eclipse the same period in 2014 when firms raised just over $1bn and are hundreds of millions of dollars higher than the full 12 month totals from 2010-13," it said.

Eileen Burbidge, London tech ambassador, said: "The city has become such a tech powerhouse because it excels over other tech hubs around the world. London combines the technology and digital innovation of Silicon Valley with the Wall Street financing heritage of New York and the policy making of Washington DC."

Gordon Innes, chief executive of London & Partners said: “London is now producing tech companies of genuine scale which are drawing serious money into the sector. It’s no wonder that tech is now such an important part of London’s economy.”

Expert in corporate financing arrangements in the technology sector Thilo Schneider of Pinsent Masons, the law firm behind Out-Law.com, said earlier this year that the UK is "the main hotbed for sophisticated VC investors in Europe and has the most prolific tech start-up scene on the continent".

Schneider attributed this, in part, to the UK's "friendly and supportive regulatory and tax regime for start-up businesses".

"For example, unlike in other jurisdictions, start-up businesses in the UK are not subject to minimum capital requirements and do not face being tied-up dealing with trade union issues," he said. "You can launch a company on no capital in the UK within 24 hours."

At the time, Schneider identified London's growing financial technology industry as being a major reason why the UK is the number one place to invest in technology companies in Europe.

"London is the foremost financial centre in Europe and arguably the world and so the existing bank of financial services knowledge and expertise in the City makes London an attractive place for fintech companies to launch and for fintech investors to look for investment opportunities," he said.