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Two new funds totalling over £800m could soon be investing in London startups

A pair of investment firms have just closed significant new funds which could soon be finding their way into the coffers of the capital’s startups.

European Venture Capital (VC) firm Northzone, which has previously invested in London FinTech startup MarketInvoice, has announced the closure of its €300m (approx £252m) Northzone VIII fund which it will look to invest in tech startups across the continent despite what it described as ‘turbulent market conditions’.

In announcing the new fund, Northzone also revealed it was bolstering its team of partners in the capital as Michiel Kotting joins as Partner from Accel, as it reaffirmed its commitment to the UK’s tech sector.

Meanwhile, London-headquartered private equity firm Livingbridge has raised £660m to invest in UK SMEs, its largest fund to date.

Focusing on growth equity and buyout deals for high-growth startups, the investment firm’s Livingbridge 6 fund will operate in sectors such as business and financial services, consumer markets and health care and education.

Wol Kolade, Managing Partner at Livingbridge commented: “We are delighted to have secured the support of such a high quality international investor base. This is testament to both our strong track record and the significant opportunity that exists to deliver excellent returns backing fast growth UK SMEs.

“The EU referendum result may have injected a degree of uncertainty into the UK economy but SMEs and entrepreneurs have proven time and time again that they are able to adapt and thrive in precisely this sort of environment.”

The timing of the new funds comes despite the continued uncertainty around the UK’s continued access to the single market following Brexit, with both representing a vote of confidence in the continued viability of the country’s startup ecosystem.

Speaking to City AM, Jeppe Zink, who is partner at Northzone, said that the capital’s financial services sector, and FinTech in particular, had remained robust despite June’s vote, and that the investment firm remained hopeful that financial innovation would continued to boom in London.

He commented: “We haven’t seen anyone make a dent in banking business market share yet, it’s really just getting started.

“It’s just scratching the service. We see the longer term [potential] and in lots of categories. For example, in compliance, if startups can help banks do that then that’s an exciting area.”

He went on to say that he did not believe the Brexit vote was a vote to leave the European single market, a move which he described as ‘self-defeating’ and that any concrete exit from the EU was still a long way off.

“It’s not a vote against [the European economic market]. If we’re wrong and there’s a choice [for the UK] to go it alone we’d have to rethink, but that’s four or five years down the road,” he concluded.

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