"Since 2016, London tech firms have now attracted more than £4bn in VC funding, almost double its nearest European rivals - Paris, Berlin and Stockholm - combined."
As far as investment goes, the London tech scene is booming. In 2018, the sector enjoyed another bumper year of multi-million pound venture capital (VC) funding rounds and high-profile exits, while the city’s growing herd of digital unicorns consolidated their meteoric growth.
On the international scene, London’s place as one of the world’s premier tech hubs and Europe’s tech investment capital looks as secure as ever. According to figures from London & Partners and Pitchfork, the city raised £1.8bn in VC and public funding in 2018, with more initial public offerings (IPOs) than anywhere else in Europe.
Since 2016, London tech firms have now attracted more than £4bn in VC funding, almost double its nearest European rivals - Paris, Berlin and Stockholm - combined.
2018 was a particularly strong year for London’s FinTech sector, which broke the £1bn funding barrier in its own right. The capital’s digital banking unicorns led the way, with Revolut securing £179m and Monzo £105m in single funding rounds. In the early months of 2019, meanwhile, digital savings innovator Oaknorth secured $440m in investment from the $100bn Vision Fund operated by Japan’s Softbank.
Led by London’s stampeding unicorns - the city now boasts 17 - industry insiders expect FinTech to perform strongly again in 2019. Indeed, 21% of respondents to our London Tech Week Survey said they expected the sector to once again attract the most investment.
That figure was, however, pipped to the post by Artificial Intelligence (AI) and Machine Learning, which 25% of respondents thought would draw the most funding this year. This reflects the fact that AI was the UK’s fastest growing sector in 2018, achieving a 47% year-on-year increase in investment as it attracted £736m. Just under a third of respondents (32%) said they would be focusing their own investments on AI this year, followed by cloud technologies (24%).
One of the great strengths of AI is its potential to be deployed in virtually any type of digital business. The biggest beneficiary of investment in AI last year, for example, was Culture Trip, a London-based travel company which uses the technology to curate location-based content for individual users.
Away from external funding, 57% of our survey respondents said they had increased investment in technology within their own companies in 2018. Just 8% said it had fallen.
With regards to other tech sub-sectors, 18% of our survey participants said they expected cybersecurity to attract the most investment this year. This perhaps reflects a growing concern about the challenge posed by cybersecurity, which was picked out by most respondents (28%) as the biggest challenge to digital transformation. Just under a quarter (23%) also felt cybersecurity specialists would be the most in-demand tech employees this year.
Not surprisingly given the prominence of FinTech, finance (27% of responses) was named as the sector that will face the most disruption from emerging technologies in the next two to three years. The close proximity of Tech City to The City, and the well-established links between two of the capital’s premier industries, has been driving something of a symbiotic relationship for a number of years.
Second on the list of industries most likely to feel the impact of technology in the coming years was healthcare, with 13% of responses. Investment in healthtech across Europe has been on the rise for a couple of years. London and indeed UK firms in general enjoy the advantage of having, in the NHS, the world’s single biggest healthcare purchaser on their doorstep.
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