London attracted €720m of venture capital in 2005, just €40m less than the whole of France and just under €100m more than Germany according to a new report by gateway2investment.
The figures reveal that London has the largest concentration of VC backed companies in Europe, yet still remains well behind Silicon Valley, which attracts approximately 10 times more VC investment.
The UK’s capital has 380 venture backed companies, the largest cluster of VC supported businesses outside the US. Companies in London on average receive 40% more money than the national average, and g2i puts this down in the main to their location and not differences in the distribution of companies by age, stage or sector.
Where London lags behind the rest of the country is in pre-institutional funding. While its early stage rounds are higher, for grants and deals led by business angels, businesses based in London receive less investment than other regions in percentage terms.
Regardless, companies based in the capital are also more likely to list on the AIM or main market: since 2003 one-third of listings have been London based, and so far in 2006 London companies account for 34% of IPOs and 25% of the total new market capitalisation listed on AIM.
Similarly, it is London that sees the most M&A activity in the UK, with 38% of UK-based acquisitions tracked by research firm Library House headquartered in the city, with a disclosed value of £600m in 11 disclosed deals, two of which were valued at more than £200m.