London’s climate tech startups raised all-time-high levels of VC investment in 2023

London’s technology sector demonstrates resilience and sustained growth, according to new data from London & Partners and Dealroom.

The data shows that London startups collectively raised over $12.9B in venture capital (VC) investment in 2023, marking a return to pre-pandemic levels of investment following a global pullback in VC after a spike in 2021 and 2022, with the Climate Tech sector showing a clear lead.

The data shows that London continues to lead as Europe’s number one tech hub with London’s startups having raised almost as much investment in 2023 as the next three European cities combined (Paris, Stockholm, and Berlin).

Globally, London ranks as the fourth city by VC raised, after the Bay Area, New York, and Boston. The report also shows that the UK remains the third country globally by venture capital raised in 2023, after the US and China.

The top London climate tech startups that have raised the biggest rounds in 2023 included electric vehicle battery company Zenobe Energy (£870M), Octopus Electric Vehicles (£150M), and modular housing company TopHat (£70M).

In addition, in 2023, climate tech made up 23% of Foreign Direct Investment (FDI) into London, twice the percentage of 2022. This includes the world’s largest electric vehicle maker, BYD, which selected London as its UK headquarters, as well as award-winning Cloverly from Atlanta, renowned for its climate action tech, as well as Allume Energy from Australia, specialists in providing shared solar solutions to flats.

In line with the global interest in AI, investment in Generative AI companies in London has exploded in the last two years. In 2023, London-based GenAI startups raised $232M in 2023, which is 20x the total of 2020.

Companies include Synthesia, a Gen AI video company which also achieved unicorn status with a $1.0b valuation. 2023 was a strong year for unicorns in London, with three additional startups achieving valuations over $1 billion, including Quantexa in Decision Intelligence, Reward Gateway offering HR tools, and Zyber 365 in Web3 Cybersecurity.

VC strength in London remains remarkably resilient, London-based VC investors have raised over $24B of dry powder in the last three years. London-headquartered VC funds account for over 30% of all VC raised in Europe in the last three years.

In addition, London continues to attract a series of large international VCs and funds including A16z, Antler, and BDA Partners, as well as several impact funds including Sustainable Ventures, Octopus Ventures, and 2150.

Janine Hirt, CEO of Innovate Finance said: “It is great to see London continuing to attract large investments for the tech sector, including FinTech. Despite challenging economic headwinds, London and the UK maintain their position as the second-largest global hub for FinTech investment, far surpassing other European counterparts, a true testament to our outstanding ecosystem of founders and entrepreneurs.

“We are hopeful for positive growth in 2024, and we look forward to working with industry, government, and regulators to maintain the UK’s international leadership in financial innovation, including ensuring proactive regulation and attracting investment across all stages, from seed to critical growth funding”.

By Mark Adair – Correspondent, Bdaily

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