Investors looking to pump capital into a tech startup are better off looking around London than the San Francisco area
San Francisco and the surrounding Bay Area, home to Silicon Valley, is widely considered to be the Mount Olympus of the tech world. But a spot of number crunching shows that’s not quite true — and that London is better for tech investors.
Simply Business , the UK-based insurance broker, analysed the number and talent of startups and investors in several cities using AngelList and LinkedIn data, and found that Silicon Valley doesn’t always come out on top.
London provides the most favourable conditions for people seeking to invest in a startup, the data showed, with 1,306 investors and 3,828 startups — a ratio of roughly three startups to investors. By comparison, San Francisco has 5,619 investors and 11,722 startups, a ratio of two to one.
Tech firms in London raised a record $1bn (£640m) in investment this year , according to Boris Johnson’s promotions agency London & Partners. That’s almost a third higher than last year’s £444m and more than 10 times the total investment in 2010.
Analysts at Oxford Economics expect London’s growing tech sector, centred around the 1,500-plus business in Shoreditch’s Silicon Roundabout, to create 46,000 new jobs in the next 10 years and add £12bn to the UK economy .
Recent research from Telefonica UK found that London is the European capital of startup incubators and accelerators, with 36 programmes currently running.
Greater Los Angeles — home of Snapchat, SpaceX, Oculus and Beats Electronics — also has a better-than-average ratio of investors to startups, meaning there is less competition for tech titans. Other prime cities for investors looking to bag the best digital deal include Toronto, Atlanta, Bangalore and New Delhi.
However, this high proportion of startups to investors means that London and LA are not the best choice of cities for companies looking for funding. The Bay Area reigns here, along with New York, which is home to 7,584 startups and 4,121 investors.
Seattle and Singapore, and Hong Kong to a lesser extent, also have better-than-average circumstances for startups seeking capital.
For startups that have funding but need to attract talent, the data advises looking East rather than to the West Coast.
New Delhi, Bangalore and Mumbai are rich with developers, which makes them attractive choices for startups looking to hire. San Francisco, New York, Los Angeles and London are all extremely competitive environments for recruiting developers, but Simply Business’ number crunching shows that Boston, Washington DC, Dallas, Denver and Seattle provide better alternatives for US-based new companies, although they have higher living costs than the Indian cities.