Silicon Round-up: Improbable deal highlights London appeal to Silicon Valley VCs

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The latest deal is $20 million in funding for Improbable, a start-up aiming to make next generation virtual worlds for gaming.

The money came from renowned US VC firm Andreessen Horowitz, which has in the past backed the likes of Facebook and Twitter.

Its Andreessen Horowitz’s second investment in the UK, coming hot on the heels of its first – a $58 million investment in TransferWise in January.

A few years ago companies in the capital complained it was difficult to get funding from UK investors, let alone attract cash from the US. Now increasing numbers of VCs are looking across the Atlantic for new investments.

I asked a London-based VC recently whether the shift was in part due to the glut of Uber-level valuations in the US making it hard to find a good deal over there anymore.

He knocked that back, saying that valuation figures are essentially just a rough guide to work out deal terms. If companies and teams are good, investors will want to put in cash at almost any level.

The real reason we’re seeing more Silicon Valley cash here, the VC told me, is a simple one – London businesses have got better.

A few years ago Silicon Roundabout was full of businesses messing around with apps or trying to ape Silicon Valley social networks. Now there is a wave of businesses breaking new ground in things like FinTech and gaming.

Venture capital is all about spotting the next big thing and London is starting to hold its own globally when it comes to one of technophiles’ favourite buzz words – innovation.

UK FinTech investment hits $600 million

It’s no surprise then to learn that investment in UK FinTech is booming.

Figures from consultants Accenture out this week claim that the level of investment in the sector globally leapt from $4.05 billion to $12.2 billion last year. In the UK and Ireland investment jumped from $264 million to $623 million.

The figures also confirm the UK as the centre of Europe’s FinTech scene, with 42% of all the sector’s funding in Europe for going into the UK and Ireland.

Activity looks set to continue too, with the Government doing its best to give the sector a leg-up.

Plans were announced last week to open up the financial sector to more competition. Expect to see plenty more cash flowing into FinTech.

Uber’s TfL talks

Transport for London has been on the end of plenty of stick from angry cab drivers over its treatment of Uber, with Steve MacNamara of the Licensed Taxi Drives Association accusing TfL of giving Uber the “kids glove treatment”, something TfL denies.

A Freedom of Information request submitted to TfL reveals the transport regulator held six meetings with representatives from Uber last year, discussing issues such as Uber’s operating model, the role of drivers in taking bookings and the exact function of the app in the booking process.

Clearly TfL were convinced as Uber have been given leave to operate, although a High Court judgement on the legality of their model is pending.

Uber is currently mounting a major charm offensive in the UK, hiring rafts of PRs and lobbyists in a bid to convince the press and regulators that it is a force for good rather than the cowboy operator running rough shod over the law as it is often portrayed. Time will tell whether this succeeds.

Is Shazam eyeing a NASDAQ listing?

Shazam has been tipped to go public for at least the last two years and management have said they plan to float, although have been tight-lipped on potential timings.

The question is where will they list when the time comes? New York’s NASDAQ certainly seems to be courting the business, announcing this week that it has signed up Shazam to its private market equity management service.

NASDAQ will manage Shazam’s stock plans and private shareholder registers and it’s easy to imagine this transitioning into a full blown float.

If Shazam does head to America it would be a big blow for the UK tech scene. Just Eat is the only home growing tech business that has stuck to its roots and listed in London in recent years.

The London Stock Exchange’s admirable efforts to encourage businesses to list here have also largely failed.

The tailor-made High Growth Segment, launched last year, has only been joined by Just Eat, which left in short order.

For the capital’s technology ecosystem to truly take root we need more businesses at the very top blazing a trail and it would be a shame if that trail led to New York.

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March 27, 2015 |
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