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Unicorns and roundabouts – London’s thriving tech sector

Last week was London Tech Week, a week of events that celebrated London’s global position as a hub of tech innovation and entrepreneurial growth.

Despite the odd hiccup (like the delegates at a conference about tech uptake in established industries being made to queue for the printer to print out a paper ticket), the general message was overall very positive: the London tech sector, of which Zopa is a part, is thriving.

London’s tech prowess is receiving international recognition. Research released last week by EY found that 1,000 "international tech investment projects" based themselves in London between 2005 and 2014, compared with 381 in Paris – and 853 in the whole of France.

The capital is also the leading European breeding ground for unicorns – the term coined for tech companies that are valued at over a billion dollars due to their elusive nature. Research from GP Bullhound found that last year 8 of Europe’s 13 new unicorns were founded in the UK, and 7 of these came from London.

Did you say a unicorn?

Yes. Just one blog post has turned a unicorn from a horse with a funny head into the international shorthand term for tech success. Back in 2013 when that post was written, a billion-dollar company was so rare it warranted its mythic name, but the ‘herd’ is growing fast: the number doubled from 39 worldwide in 2013 to around 80 now.

The US is by far the biggest producer of unicorns (22 new ones last year, compared to Europe’s 13) and is still home to all the super unicorns (companies like Facebook and google with valuations of over $100 billion). However, the UK takes the prime producer spot in Europe. It has bred 17 billion-dollar companies, the majority of which are based in London. The next European contender is Sweden, which is home to just 6.

Round the roundabout

There is a lot going on in the London tech scene.

East London’s Tech City (known as Silicon Roundabout) is the third largest technology start-up cluster after New York and San Francisco. While it’s the home of many innovative start-ups, major companies are also setting up in the area to capitalise on its concentration of talent and creativity – both Google and Amazon have development operations there.

It benefits from government backing in the form of TechCity UK, which launched in 2010 to support the East London tech cluster and has since expanded its remit to include the whole of the UK. Zopa is part of TechCity’s Future Fifty programme, a cohort of fast-growing, digital businesses selected for special support, including access to government.

In practice, the London tech scene stretches far beyond the Old Street roundabout. Accelerators, incubators and co-working spaces have sprung up across the city. Canary Wharf, for example, is home to Level 39, Europe’s largest technology accelerator. We’re also seeing the creation of specific initiatives that align closely with industries that sit outside the tech cluster. Last week, for example, Startupbootcamp announced a London-based insurance tech accelerator.

So much of the success of these clusters comes from the close proximity and connectivity of all these things, and the first day of London Tech Week saw the launch of www.tech.london, a new website that aims to facilitate this. It will act as a hub for these various components of London’s entrepreneurial ecosystem. See Zopa’s profile on it.

FinTech leads the way

Within the tech industry, financial technology (FinTech) is leading the charge. Zopa which pioneered the way back in 2005 has benefited from London being the place where technology and finance intersect with lots of talent on tap.

London now employs more workers in FinTech than New York, Silicon Valley and San Francisco combined. Startupbootcamp FinTech found that 63% selected London as the world’s leading city in FinTech, up from 51% who selected it in 2014. George Osborne recently described Britain as ‘leading the FinTech revolution’ in his latest Mansion House speech.

Tech’s onward march in London is an exciting thing to be a part of. London’s has proved that it is a fertile breeding ground for billion-dollar tech companies, and commentators agree that nothing is better for breeding more unicorns than an existing herd. Despite the innovative nature of the tech industry, capital is still conservative and will be more willing to invest where there’s proof of previous success.

Mayoral hopefuls are also lining up to demonstrate their commitment to the sector. Last week Tessa Jowell penned a piece promising faster broadband (yes please) in the capital in City A.M.. The week before, Sadiq Khan, another Labour mayoral candidate, came in to Zopa to learn more about the FinTech sector and explain how he aims to support and encourage our growing industry.

Zopa is continuing to grow at pace. Innovation in the way we lend has seen the number of loans double, and new partnerships with other disruptor companies create new ways for us to work with both lenders and borrowers. This summer will see us lend our billionth pound, which is a strong sign that P2P lending and Zopa has matured, proving the model works.

We look forward to the day when we are lending over £1bn a year and there will be more and more unicorns roaming the streets of London, the greatest FinTech city in the world.