The UK’s tech investment climate heating up

A healthy business environment and a positioning as one of the corporate finance capitals of the world, London is churning out vibrant digital media start-ups that are increasingly attracting venture capital from across the pond and elsewhere. Especially strong in intelligence-gather platforms and e-commerce innovation, the UK is becoming a hotbed for business transfer agents and creative minds.

Although 2013 saw a slowdown in venture capital injected on the ground, the UK continues to be the dominant venture capital magnet in Europe. The first half of 2013 saw British companies receive $656m in financing, some 15% less than a year earlier. Many expect 2014 to pick up the pace, with the accelerating acquisition and capitalisation arms race between the US’s dominant tech giants (Google, Facebook, Apple etc.) driving a frenzy in the market. More firms are also removing liquidity from the much-hyped emerging markets and transferring them to the US and other developed markets, as seen by the exchange rates collapses in Turkey, India and Russia. The major challenge in Europe is coming from Germany and France, who are catching up in venture capital inflows, but corporate financing firms admit the British market remains some way ahead. Superb interconnectivity with Silicon Valley is one factor, while familiarity with the local landscape by foreign firms and pro-finance regulation are others.

So what are some of the attractive movers on the ground?

DataSift, which attracted $42 million last year, is in the big data and big business domain, and looks to monetise the various social media analytics trends that companies are increasingly valuing. Similar to the likes of Socialbakers, the UK firm looks to deliver brand information and mines for trends that it can then interpret into direct marketing opportunities. Its client list is already impressive, counting among its users Bloomber and Dell, and the company is pushing forward beyond social media. Further rounds of capital are likely as the firm remains unprofitable, but the leadership is positive, aiming for a billion-dollar IPO as its endgame.

Achica picked up just over $18 million in mid-2013 after seeing rapid annual growth in the two preceding years, and the company is rapidly discovering its own nice segment. The platform essentially attracts bargain-hunting consumers and highlights cut-price rates in current lines on luxury goods, specialising in homeware and lifestyle products. The innovation comes in reserving stock from retailers as opposed to buying excess inventory and last-season leftovers. This ability to keep up with the latest trends but at consumer-friendly prices has been a foundation of its growth model. London’s status as one of the shopping capitals of the world, and the presence of a wealth of retailers, certainly helps this business to thrive and build relationships in the market. Whether this model can transfer globally, especially to countries with less developed retailing landscapes, remains to be seen.

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