London Has Officially Become the Technology Capital of Europe

The UK has officially cemented its spot as Europe’s home to technology, as the country now boasts 100 unique tech companies with a value of $1 billion or more. London is leading the charge, with more than 60 of those unicorns calling the city home.

Tractable, the computer vision company founded in 2014, became London’s 100th unicorn in June. The company raised $60 million in Series D funding after seeing 600% revenue growth over the past 24 months.

Since 2017, London has seen its number of unicorns — local, private tech companies valued at $1 billion or more — rise by 127%, with the number of unicorns in the UK growing tenfold over the last decade.

Tractable’s $1 billion valuation confirms London’s status as a tech powerhouse, but the UK has proven its worldwide potential as a tech powerhouse in recent years. Venture capitalists now see the country in general — with London leading the way — as an innovation hotbed increasingly on par with other global tech capitals such as San Francisco and Beijing. 

A huge year for UK technology

In 2020 alone, VC investment into UK tech firms hit $15 billion, a $200 million increase over 2019 — which itself saw record-breaking VC investment. Overall, VC investment in London-based startups has increased by 800% since 2015, compared to around 300% for Europe as a whole. As a result of this investment, the UK now has more tech unicorns than Germany, France and the Netherlands combined. The U.S. and China are the only other two countries to have 100 or more unicorns.

While the recent uptick in London-based unicorns may cement the city’s tech status, the milestone reflects a local tech culture that has been building momentum for more than a decade. 

Russ Shaw, founder of Tech London Advocates, said in a 2021 interview that London’s staggering growth has been a long time coming. “We are currently witnessing a generation of scaleup businesses reaching new heights and driving masses of inbound investment along with real momentum for the UK’s public markets,” he said. 

“For years we have worked to cultivate a vibrant collective of tech startups in Britain, now we are seeing the fruits of world-class talent, a progressive regulatory environment and deep pools of capital as they scale.”

One example of this progressive regulation is the UK’s open banking legislation, which has positioned the country as “a front runner for its supportive regulatory approach to innovation in financial services,” Fintech magazine wrote in 2020, adding that “this allows UK fintechs to innovate in areas currently unavailable to the US and other countries across the globe.” 

As of 2021, 11 of the fastest-growing fintech unicorns in the world were based in the UK — including Monzo and Revolut — second only to 46 in the US and 13 in China.

London leads the way

London is also leading the charge in sustainability-minded, “impact startups”, as VC investors view climate change and clean energy solutions as increasingly attractive investments. London’s “impact unicorns” currently include Octopus Energy, Arrival and Babylon Health; the city has launched 241 impact startups since 2006, compared to just 95 in fellow tech capital San Francisco.

Because of the high concentration of impact startups, London’s growth is impressive on a global scale, not just when compared to other European tech capitals: between 2015 and 2020, London’s impact firms secured 429 deals, more than any other city in the world. The effects of this growth on the UK job market has been profound, as tech jobs in the country increased by 40% between 2018 and 2020. And during the COVID-19 pandemic, when industries around the world were hit with substantial job losses, London’s tech industry grew: since July 2020, job opportunities in tech have increased at a rate of 2.6% a month. The industry now employs 2.93 million people across the country, accounting for 9% of the UK’s overall workforce.

“It’s fantastic to see the UK’s tech companies flourishing, despite all the challenges of 2020,” the UK’s Digital Secretary Oliver Dowden said of the tech industry’s success during the pandemic. “The thousands of high skilled jobs they are creating will be a crucial part of our economic recovery and the government is committed to supporting the tech sector through an unashamedly pro-tech approach”

And while London has now cemented its spot as a top tech destination, the growth is poised to continue: the number of “futurecorns” — or tech companies worth more than $250 million, which are poised to become unicorns — has risen nearly 1200% in the UK over the last decade.

“The UK has become a global capital for fintech and billion-dollar tech companies,” Shaw said. “My hope is that in the next ten years, it becomes equally renowned for its diverse and inclusive tech ecosystem, for enabling everyone to access digital skills and for championing emerging verticals like AI, cybersecurity, and e-commerce.”