London Big Ben 2

Trend Analysis - 04 February 2020

Increasing number of Unicorns spotted in London

It is not the mythical creatures that have been seen in London but tech Start-Up businesses whose valuations have exceeded a billion US dollars. In fact, the UK is the home to more Unicorns than any other country apart from the United States and China.

Author of article:

Steven Landes

Managing Director, Corporate Services - UK

It’s been reported recently that a surge in foreign investment is helping put the UK’s tech scene on track for its best year ever. In 2019 investment in UK Tech hit £10.1bn which is up £3.1bn over 2018 according to the government backed Tech Nation and the business database Dealroom.co for the Digital Economy Council. The ‘usual suspects’ US and China have again been identified as the main sources, but what’s notably being overlooked is the contribution from a new and fast-rising source: Eastern Europe.

 Eastern European investment notably differs from that emerging from China or America based on what investors are looking for, namely the availability of talent, the comparative ease of business startup and access to venture capital funding. This group also tends to move much faster with social media support and tend to be clustered around tech hubs in Cambridge, Bristol , Oxford , Manchester and Edinburgh and of course the City of London.

Over the last couple of years, there has definitely been a significant influx in the number of tech enquires and start-ups focusing on the fintech space. London has always been a financial capital, this trend will continue as more businesses seek to harness internet applications for London’s extensive range of financial products. Recent examples from Eastern Europe which have achieved the Unicorn valuation include Revolut, Badoo and Transferwise. This has been recognised by the Mayor of London Sadiq Khan who speaking last year said “ Our city is the undisputed tech capital of Europe and the record £7.5bn investment in this sector clearly shows London open to talent and investment from all over the World” and Nicky Morgan the digital secretary who said “ Our tech companies are not only commanding the confidence of global investors but they are also creating new jobs and wealth across the country”.  

Investing in start-ups is always risky but the rewards for the brave can be substantial especially when investing in tech companies. The best advice for anyone looking to invest in UK’s tech sector is the same regardless of their origin: do your due diligence. This means not only taking a close look at your investee, but also making sure you get specific and clear advice on topics like tax reporting, employee/director contracts and company structure, which can avoid costly pitfalls for investors who want to move fast. Even with a market as advanced and investor-friendly as the UK’s , the right guidance is critical to identifying good, honest people with businesses you can trust with your investment.

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