If Brexit is supposed to send businesses flocking, it hasn’t happened yet. With just weeks to go until the United Kingdom is supposed to crash out of the European Union, London remains the startup capital of Europe.
According to new research conducted by GP Bullhound on behalf of London and Partners, the UK capital is currently home to more unicorn tech companies than any other European city.
A unicorn is a term used to refer to startup companies that are valued at more than $1bn. These companies typically fall under the technology sector.
As of 2019, London is home to 13 unicorns, almost double that of the next most successful city, Berlin. An additional four London startups have been acquired since achieving unicorn status.
Since 2009, the likes of ASOS, Markit Group, JustEat, Zoopla, Fanduel, Farfetch, Funding Circle, Skrill, Transferwise, Mimecast, Improbable, OakNorth, Outfit7, BenevolentAI, Monzo and Revolut have grown out of London’s startup scene.
The list has grown rapidly over the past half-decade. In 2013, London had just two tech unicorns: online retailer ASOS and financial information provider Markit Group. However, that had grown to nine startups by 2015, and has continued to grow rapidly since.
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According to Alliott Cole, CEO of Europe’s largest early stage investor Octopus Ventures, this points to the growth of talent and investment in London’s tech scene.
“The level of investment now available to UK startups continues to lead a growing and maturing European ecosystem,” Cole said. “Like some of the more mature technology hubs in the US, London is starting to feel the benefits of a growing pool of serial entrepreneurs with experience of taking businesses to very significant scale.”
London unicorns: Is London still the place for new tech?
Brexit has raised concerns for technology companies, as it has for every industry. Among the concerns are uncertainties over the ability to attract top talent to London after Brexit, with free movement expected to end.
Cole agrees that this could be a problem, stating that London “must continue to welcome talented individuals from across the world”. However, he still feels that London is the best place for tech entrepreneurs hoping to become the next ASOS, JustEat or Monzo.
“This data clearly demonstrates that the UK is the ideal home for ambitious entrepreneurs looking to start and scale industry defining companies,” Cole said.
“When looking at the future of money, the future of industry and the future of healthcare, the opportunity for London to create extraordinary companies has never been stronger.”
Despite the uncertainty, London remained the leading city for foreign investment in 2018. According to London & Partners’ research, London attracted more foreign direct investment (FDI) projects that any other city, including other global hubs such as Singapore, New York and Dubai, last year. Likewise, the city attracted £1.8bn in venture capital funding, more than any other city in Europe.
While London’s losses ahead of Brexit cannot be ignored (a third of companies will consider relocating due to Brexit), the tech sector seems certain that its future in the capital is secure. Google, Facebook and Apple have plans to open new HQs, development centres and office spaces in the capital in the next five years, while the number of successful startups will only continue to increase.
“London is the beating heart of the European tech scene, and it is great to see so many unicorns currently based here, along with several contenders that are likely to hit the status next,” said Manish Madhvani, co-founder and managing partner of GP Bullhound.
According to the study, there are 15 startups with the potential to become London unicorns over the next two years, compared to 13 in France, eight in Israel and seven in Scandinavia.