London VC is growing.
Despite lingering uncertainty over Brexit, UK tech companies raised more than £6.7 billion in 2016.
To put things into perspective, the industry raised a mere £1.4 billion in 2014 — that's a 131 percent increase in only two years.
Throw in some generous tax incentives provided by the UK government, and a verbal commitment from London Mayor Sadiq Khan for the capital to become the world's leading smart city.
While London isn't the only international hotspot that has committed to utilizing new technologies to save money, curb energy usage, and provide citizens with new forms of convenience, it is arguably in the best position to do so successfully.
With such a supportive community, it's no wonder tech founders are flocking to London.
As Taavet Hinrikus, co-founder of TransferWise noted:
"When we were setting up TransferWise six years ago, London was the obvious choice for us. We even turned down Silicon Valley’s biggest investors at our Series A round because they had one condition: they would invest if we moved from London to Silicon Valley. We said no."
London venture capitalists are arguably most friendly toward technology startups with a focus on FinTech, eCommerce, and Cloud-based Software. The city has proven itself a solid fundraising location for both early and later-stage startups, with half of all funding in 2015 raised by later-stage companies.
In this article we will focus on some of the UK's most talked about venture capital firms for tech startups. Though it's by no means exhaustive, after reading it you will have a better idea as to what some of London's tech-focused VCs have to offer.Let's get started:
London Venture Capitalists Investing in Tech: 8 Funds to Know About
1. Notion Capital
Founded in 2009, Notion Capital is focused on high potential businesses in B2B SaaS and Cloud Services markets. Having previously founded, built, and exited two highly successful SaaS companies (Star and MessageLabs), the Notion Partners have strong insight as to what it takes to reach ultimate success within the vertical.
"We are inspired by outstanding founders tackling the biggest business problems. Like the best coaches, we offer meaningful support from the sidelines. We are proactive, empathetic and supportive of our founders as we understand how hard it is to build a business."
- Total funds raised: $370 million.
- Average investment size: $500,000 to $2.5 million.
- 68 investments in 37 companies in their portfolio.
- Invests in early stage: Seed + Series A.
- Achieved five exists.
Notable Investments: NewVoiceMedia, Tradeshift, MOVE Guides and Currencycloud
Specialties: SaaS, Cloud Services, FinTech, Digital Marketing + AdTech, Customer Management, Big Data, Cyber Security, Productivity & Collaboration
Need some help preparing for your VC pitch? Get our guide: 12 Things You Should Know About Raising A Seed Round
2. Passion Capital
Founded in 2011, Passion Capital is a partnership of entrepreneurs committed to helping founders and early-stage teams build leading digital media and technology companies.
Over the past decade, Passion Capital has supported some of Europe's largest technology exits, including Ricardo de (acquired by QXL), Skype (purchased by Ebay), Last.fm (Acquired by CBS) and QXL/Tradus (acquired by Naspers). Passion Capital has had the biggest exists of the year (by market value) for four of the past ten years. The best way to contact Passion Capital? Via a warm introduction.
"While we occasionally hold open office hours at our office, White Bear Yard, (announced via Twitter)
and our email addresses are pretty easy to guess or find online, the best way to reach us is through a mutual contact. Introductions help to give context and you the attention which may otherwise go missing if you cold call."
- Total funds raised: $129 million.
- Average investment size: £200,000 to £14 million.
- 86 investments in 51 companies in their portfolio.
- Invests in early-stage; Seed + Series A.
- Achieved three exists.
Notable Investments: DueDil, Show My Homework, and adzuna.
Specialties: Cloud Services, SaaS, Digital Media, eCommerce, Transaction Processing, Analytics
3. Octopus Ventures
Founded in 1999, Octopus Ventures is one of Europe's longest running venture capital firms. As of 2017, Octupus has invested in more than 100 companies across Europe and the UK.
The firm's investment portfolio includes a pretty even mix of B2Bs and B2Cs (56 percent and 44 percent, respectively). Like other firms on our list, Octopus' team roster includes several individuals who launched, grew and sold their own companies in industries from consumer goods and professional services to technology and telecoms.
"Seeking the bold and the talented: We seek unusually talented teams intent on building businesses that can scale explosively to create or transform an industry. If this describes you, or someone you know, then we'd love to hear from you."
- Total funds raised: £5 billion.
- Average investment size: £2.6 million.
- 167 investments in 105 companies in their portfolio.
- Invests in Series A to Series B.
- Achieved 24 exits.
Notable Investments: Zoopla, Swiftkey, Secret Escapes
Specialties: Internet + Consumer, Software, Hardware + Infastructure, FinTech
4. Balderton Capital
Founded in 2000, by Benchmark Capital in Silicon Valley, Balderton became fully independent as a UK firm investing in early-stage European startup companies in 2007.
Balderton prides itself on its team-oriented approach to working with early-stage technology companies and its built-in community of more than 150 founders. As the largest European focused venture fund, the organization typically invests between $1 million and $20 million into technology companies it believes have the potential to globally disrupt huge industries. The majority of the firm's capital stems from university endowments, pension funds, and charitable foundations.
"Our partnership consists of some of Europe's most successful entrepreneurs and venture investors. By bringing their combined experience to bear, we enable our portfolio companies to access an unrivaled array of knowledge, skills and capital. Our focus is on ambitious entrepreneurs, disruptive technology and sustainable businesses."
- Total funds raised: £2.16 billion.
- Average investment size: between £775,000 to £15 million.
- 209 investments in 122 companies in their portfolio.
- Invests in all stages; Seed to Series C.
- Achieved 35 exits.
Notable Investments: Kobalt, Bebo, Citymapper, Wonga, and Magic Pony.
Specialties: Mobile, Software, Fintech, Curated Web, HealthTech, eCommerce, Games, Marketplaces
5. Connect Ventures
Connect Ventures is a lean, five-partner firm dedicated to cultivating an investment portfolio of quality over quantity. Since opening its doors in 2012, the firm has acted as a lead Seed investor in 85 percent of their projects. More than half of Connect's portfolio consists of London-based startups.
"We’re passionate about the power of product to transform people’s lives, on a massive scale. We fundamentally believe that products made with love and loved by many are crucial factors for success and scale. So we’ve created a distinctive VC firm that is singularly focused on Founders who are instinctive about product."
- Total funds raised: $33.95 million.
- Average investment: between $500,000 to $10 million.
- 35 investments in 26 companies in their portfolio.
- Invests in early-stage, typically Seed.
- Achieved four exits.
Notable Investments: Citymapper, Curve, and SecretSales
Specialties: Consumer Mobile, SaaS, eCommerce, Digital Media
6. Index Ventures
Founded in Geneva in 1996, Index ventures has built an impressive international network of 160 companies in 24 countries, backing startup entrepreneurs throughout the world. The firm prides itself on backing the best and most ambitious entrepreneurs, and its role in employing 35,000 individuals worldwide.
The company covers every stage, from earliest seed through Series C, across every sector. With principal offices in Geneva, London, and San Francisco, Index Ventures is able to provide their founders with a large range of key connections and resources.
"Working side-by-side with these visionaries makes us incredibly optimistic about the future. We are a team of entrepreneurs that have started (and are still starting) companies, run big businesses and have lived through the highs and lows of the last 20 years in the tech industry. Collectively, we are investors that have lived in dozens of different cities and worked all over the world."
- Total funds raised: $5.82 billion.
- 578 Investments in 339 companies in their portfolio.
- Average investment size: $2 million to $110 million.
- Invests in all stages, from early Seed to Series C.
- Makes about 25 new venture and growth investments per year.
- Achieved 113 exits.
Notable Investments: Dropbox, Etsy, and Last.fm
Specialties: Consumer Internet and Mobile, Enterprise Technologies
Episode1 Ventures is one of the UK government's Enterprise Capital Funds, created to support fund managers investing in small, high-growth businesses. The organization opened its doors in 2013 with a £12.5 million of private investment (funded by several well-known entrepreneurs, including Alex Chesterman of Zoopla) that was matched with £25 million of public money, for a total of £37.5 million.
As reported by UK Tech News, the initial sum was intended to fund as many as 30 early-stage British tech companies with between £250,000 and £2 million, respectively. Episode1 has now raised a total of £60.25 million to date. The firm prides itself on providing a "frank and fast approach" and playing a hands-on role in growing the companies they back.
"We are building a portfolio of companies that are using software technology to disrupt their chosen marketplaces. It is a diverse group across a range of industries, but with two common themes – a great founder and a big market. We also like to invest once a company has launched their product and has some clients we can reference. Revenues are usually from zero to £50k per month when we first invest."
- Total funds raised: $60.21 million.
- 32 investments in 20 companies in their portfolio.
- Average investment size: $200,000 to $1 million.
- Prioritizes early-stage investments, but invests in early Seed to later-stage A and B.
- No exits yet.
Notable investments: betfair, LoveFilm.co, and Natural Motion
Specialties: Software, MedTech, Entertainment, Consumer Tech, Fintech, Services, PropTech
8. Fuel Ventures
Founded in 2013, Fuel Ventures is quickly making a name for itself thanks to its hands-on approach to early-stage investments. Instead of separating itself from its portfolio companies, Fuel Ventures literally works alongside them.
Many of the organization's 200 founders, advisors, and investors can be found at the company's London headquarters, which is located within the RocketSpace tech campus. This unique work arrangement allows the organization to provide its founders with more personalized and immediate day-to-day guidance.
Founded by entrepreneur and investor Mark Pearson, the organization now boasts 14 portfolio companies with global multi-million revenues. The organization prides itself on maintaining an atmosphere of innovation, collaboration and support that fuels massive success.
We bring a broad range of operational expertise to the early stage of a company's life. All of the fund's early stage portfolio companies are based in our London HQ. We enjoy rolling our sleeves up and building companies alongside the founders and their teams. We do this by assisting the Fund's companies in: Mentoring; HR, legal and operational support; guidance on marketing and growth strategies; helping to identify follow-on financing; product and technical assistance; and exit planning.
- Total funds raised: Undisclosed
- 9 investments in 7 companies in their portfolio.
- Average investment size: $200,000 to $2.5 million.
- Prioritizes early Seed to later-stage A investments.
- No exits yet.
Notable investments: MyVoucherCodes, Last Second Tickets, Play Lists
Specialties: E-Commerce, SaaS, Marketplace and FinTech
Expand Your Fundraising Options
The opportunity for raising capital in London is vast — with many different VC firms specializing in many different verticals and stages.
While this list was by no means exhaustive, we hope it has provided you with some insight into London's VC landscape. As you know, the best way to get on the radar of a particular VC (hands-down) is through a warm introduction. Luckily, this is a lot easier than it sounds when you join an existing community that already has connections in place.
If you're the founder of a tech startup with a minimum viable product (MVP), with Seed to Series C funding, RocketSpace’s innovative tech community could help get your foot in the door.
Our London technology campus provides:
- A wide network of startup entrepreneurs, VCs, corporate partners, and advisors.
- Pitch Workshops.
- High-caliber networking events.
Come join us! Schedule a VIP tour and get a free day pass.
Looking for more fundraising advice? Skip the hours of researching, and download our free eBook
NAVIGATE LONDON'S TECH SCENE WITH ONE HANDY GUIDE.
The Meetups, VCs, Accelerators, Events, and Key Places London Tech Startups Need to Know About.