London's impact tech attracts VC capital from North American investors

London skyline

VC investment into London’s tech companies has increased by nearly eight times between 2015 and 2020, while the city has attracted growing amounts of VC capital from North American investors in recent years, data from London & Partners and Dealroom.co shows.

London has added three new impact unicorns to its list this year; Octopus Energy, Arrival and Gousto, which takes London’s impact unicorns total up to four, including Babylon Health.

According to research produced by Dealroom.co, VC investment into impact tech startups in London has grown by almost 800 percent since 2015, compared to 3.1 times in Europe as a whole.

Meanwhile, interest from North American investors has been increasing year-on-year, as funding rounds for London-based impact companies involving North American investors in 2020 include a USD 118m growth equity round into Arrival by Blackrock, a USD80 million Series B round for COMPASS Pathways and a USD25 million Series C funding for Tractable.

Funding rounds including at least one North American investor have made up USD234m of VC investment so far this year – up from USD85 million in 2018 – and equating to a fifth of all VC investment into London’s impact startups.

“London is a global hub for tech and innovation – these findings show that our city has quickly become a global leader for start-ups aimed at tackling some of the most pressing challenges we face as a city and as a country,” deputy mayor for business, Rajesh Agrawal, said.

“As we recover from the impact of the Covid-19 pandemic we have the opportunity to help build a greener, fairer and more inclusive city – and clearly London’s dynamic tech sector has a critical role to play,” he added.

2020 is set to be a record year for London’s impact tech companies, who have received USD 1.2 billion in VC investment from January to October, already matching 2019 levels. The city has produced 241 impact startups since 2006, compared to 95 companies founded in San Francisco, 132 in Berlin and 129 in Stockholm.

London-based impact companies tackling climate change and clean energy make up 53 per cent of overall VC investment into London’s impact tech companies.

An impact startup refers to any company addressing one or more of the 17 UN’s Sustainable Development Goals on climate action, clean energy, gender equality and zero hunger.