London has one of the world’s most favourable ecosystems to build a globally successful startup, according to the latest data from Startup Genome’s The Global Startup Ecosystem Report 2020.
The UK capital improved on its joint third place in 2019, to tie in second place with New York this year. Silicon Valley continues to dominate the rankings whilst Beijing and Boston came in fourth and fifth.
Access to capital, investment and global talent has fuelled London’s ascent to number two, up from number eight in 2012 when the first rankings were released. The report analyses cities around the world where early-stage start-ups have the best shot at building global success.
The research reveals that the UK capital is amongst the top cities in the world to grow a globally leading company, with start-ups in London benefitting from high levels of global connectedness to other top ecosystems and a flow of knowledge into the city which helps them to build global market reach.
London has long been established as a thriving, well-connected financial ecosystem and fintech continues to dominate fundraising, accounting for 39% of the $4bn raised by London-based companies so far in 2020.
Access to funding is an essential ingredient for any scaling start-up. The average seed round in London is $650k, compared to a global average of $494k. London-based companies can tap into global markets due to the UK’s favourable time zone, with the city acting as a launchpad to scale and grow internationally.
London also benefits from a strong talent pool and ranked highly across the board for talent, particularly for STEM access and quality and access to tech talent. The city is the only top-five ecosystem with a start-up visa program which launched in spring of 2019, helping maintain its status as a global magnet for talent.
What’s more, London and New York overtook Silicon Valley in the connectedness ranking, a factor based on the number of tech meetups in the ecosystem and a life sciences-focused measure of accelerators and incubators, research grants, and R&D anchors in the ecosystem.
London recently topped the fDi x TNW Tech Cities of the Future 2020/21 list, a ranking focused on the European cities with the most promising prospects for start-ups, tech and innovation investment.
The UK capital continues to attract international investment. 50% of its FDI between 2015 and 2019 was in software and IT services, reinforcing its status as a tech powerhouse. London’s start-up ecosystem has produced 38 unicorns (companies valued over $1bn) since 1990, ahead of any other city in Europe.
“Today’s global report ranks the best cities where start-ups can build global success,” said JF Gauthier, Founder of Start-up Genome. “Start-up ecosystems outperform when their entrepreneurial community is not only open to but deeply integrated within the global start-up community. This is certainly the case for London, as it continues to play a central role in the global fabric of start-up ecosystems.”
“It’s great to see the strength of London’s start-up ecosystem being recognised once again and this result confirms what we already know: that London is a top place to start, grow and scale a business,” said Laura Citron, CEO at London & Partners.
“It is home to so many exciting companies leading the way in innovation. I am confident in London’s position as a global start-up hub. With its strong connectivity to other centres, we see lots of opportunities for London to share ideas and collaborate with cities around the world.”