London Technology Innovation Funding

Due to its status as one of the world's most forward-looking cities, London attracts a large number of startups and entrepreneurs in innovative fields like high tech. In under a decade, London's Tech City has become the British version of California's Silicon Valley, furthering London's reputation as a global technology cluster. During the last edition of the London Technology Week, a research report carried out by Oxford Economics revealed that the technology sector is set to keep growing in the British capital. The report showed that while there are more than 34,000 tech businesses already established all over London, we can expect this figure to grow by a further 11,000 during the next ten years. The report also showed that this sector is contributing to job creation, mostly (but not only) by presenting numerous self-employment opportunities.

In view of the above, it is hardly surprising that many would-be entrepreneurs are considering setting up a new tech business venture in London. But as it often happens, launching a new business is easier said than done, especially because finding appropriate funding can be complicated in an industry that is highly competitive. If you are considering getting started in the capital city's digital economy and are having troubles finding sources of funding, read on.

The tech industry in London: a few figures worth bearing in mind

Finding funding to support a new business venture is (among many other things) a matter of being in the right place at the right time. According to a recent report commissioned by the Mayor of London's office, now is the right time for high tech firms to be looking for funding. The report revealed that between January and September 2014, the city's tech companies have managed to attract a whopping £626 million in external funding, and it is believe that by the end of the year this figure will be up to 30 per cent higher than the total amount of funding raised by this sector during 2013.

So where is the funding going? The report showed that this year, the most successful London-based tech firms have been farfetch.com and takeaway.com. FarFetch was launched in 2008 as a community of independent boutiques that offered fashion-conscious Londoners the opportunity to get their hands on exclusive (and some would say far-fetched) fashion items from all over the world. Takeway.com has capitalised on London's gastronomic diversity and on the locals' hectic pace of life and now offers a convenient and reliable way of getting your favourite takeaways delivered to your London home. Over the past year, these two startups alone (which rely on new technologies in order to function) have raised more than £31 million in funding. These two new ventures exemplify some of the sub-sectors that are most likely to attract funding. As one of the senior partners at venture capital firm Index Ventures expressed, tech startups in areas like entertainment, fashion, finance, and media have the most potential to attract investment.

Where to seek funding

So where exactly may you find the right type of funding for your new startup? If you are based in East London (which incidentally is a fantastic location for technology firms), you may want to have a look at the options available from the East London Small Business Centre. The East London Business Centre offers financial support ranging between £10,000 and £250,000 to entrepreneurs who are over 30 years old as well as to young entrepreneurs. There is also funding available to startups in the creative sector.

Additional funding is available through the Start Up Loans programme, a government-backed initiative that offers low-cost unsecured loans that must be repaid in 5 years. The average loan size is £5,000 and every day more than 40 businesses get funding approval.

London-based tech startups can also benefit from a funding scheme launched last year by Mayor Boris Johnson, who set aside £22 million to help tech entrepreneurs turn their aspirations into realities. This scheme is offered in collaboration with MMC Ventures and has been specifically designed to offer financial support to tech firms during their early stages. Your chances of getting approved are much higher if you business idea involves one of the following strategic sectors: creative, e-commerce, digital media, healthcare, education, and leisure. Take a look at the scheme's portfolio to gain some insight into how other startups have already benefited from this type of funding.

Of course, the above is not an exhaustive list of all the funding opportunities available in London. The FundMap website is a great place to get started researching your options, and similarly, the StartUps site can be helpful finding alternative sources of funding for your tech venture.