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Venture Capital in the UK and how it compares to Europe

The UK and in particular London has long been seen as one of the best places to start and build a business. Boasting its “Silicon Roundabout” in the East of London, venture capitalists and entrepreneurs have flooded to the country's capital as its thriving economy continues to rival San Francisco.

Over the last few years, the economic landscape has some what changed in the US, UK and in Europe. The US has seen a change of government and the UK and Europe are going through their own political roller coaster as the UK looks to separate from the European Union.

In addition to changes in the economic and political climate, we have seen over the last decade further European challenger cities emerge within the technology sector and in line with this, VCs and Angel Investors continues to look at these emerging hubs for investment opportunities.

UK vs. Europe

The UK and Irish based businesses take the lion's share when it comes to overall funding accounting for 40% of Europe's total VC investment. The UK's investment over doubles the investment in Germany and triples investment in France.

Despite the Brexit vote, we have seen a rise in VC investment in 2017 in the UK with £2.4 billion of venture capital being pumped into British tech firms since the referendum. In fact, although UK VC investments are up, funding in Europe has fallen during this time.

A Potential Shift in Landscape

Although on the face of it, all things look rosy when it comes to the investment outlook in the UK as funding rises year on year, the Brexit shadow continues to hang over the technology sector.

As negotiations continue to take place between the EU and UK about its divorce from the block, it is largely agreed by businesses (from startup to blue chip) that its membership to the single market and access to resources through the freedom of movement of EU residents has meant that the UK may be seen as a less attractive place to do business than prior to exiting and this is likely to have a shift on new businesses starting up and the knock on will likely be less VC funding. We have already seen long established international businesses such as JP Morgan, Citigroup and Lloyds of London publically say that they will be relocating a number of jobs from the UK to the EU in the coming years.

The Main European Cities Attracting Venture Capital

Stockholm - With over 50,000 developers and more unicorns per capita than anywhere else in the world other than San Francisco, Stockholm is an ever emerging city for attracting venture capital and incredible businesses. VCs such as Nordic Venture Network, Northzone and Creandum have continued to help grow challenger businesses in the city that brought us Skype, Mojang and King.

Berlin - The city that founded Soundcloud and Researchgate and home to the infamous Rocket Internet, Berlin has a thriving VC funded startup scene which has seen a tremendous amount of growth over the last 5 years.

Helsinki - The Finnish city of Helsinki is a growing area for gaming venture funding. Companies such as Rovio which created Angry Birds and Supercell which created Clash of the Clans are just a few names in a growing list of well-funded startups that have emerged from Helsinki.

Amsterdam - Booking.com and TomTom are two of a number of VC funded unicorns that have been built in Amsterdam. We are seeing the city more accelerators and incubators emerge, and is also being seen by many London based businesses as a suitable post-Brexit alternative given the distance from the British capital.

London - Yes there is instability in London, but its deep routes are so strong that they seem to be defying the odds as it continues to be the place for venture capital in Europe. An incredible 275,000 startups employing 1.5 million people, London continues to see multiple billions every year come from venture capital into its businesses.

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