US investors help London firms score a $1bn hattrick

Raising capital when you get to a certain size is often cited as a challenge for tech businesses with global ambitions in the UK.  But there are signs that is changing.

It appears as though venture capitalists from the US are increasingly open to spending their billions on UK startups, with a particular emphasis on those coming out of London.

In the last six weeks, three London-based companies have seen their valuations climb to over a $1 billion, after each of them raised between £20 million and £36 million.

The first startup to find the back of the net was enterprise collaboration firm Huddle, which scored a deal worth £32 million just before Christmas, with the help of Silicon Valley investors like as Matrix Partners and DAG Ventures.

Hot on its heels was music discovery app Shazam, which raised £20 million last week. While the investors in the Hammersmith company were not revealed, it’s fairly likely that some of them will be based in the US.

Less than a week later, TransferWise, one of London’s hottest fintech companies, announced that it had raised £36 million in a funding round led by Silicon Valley VC Andreessen Horowitz, which has a cool $4 billion at its disposal.

The substantial funding rounds led analysts to believe that each of the firms is now worth $1 billion, or roughly £660 million.

And there we have it, the UK has three of its very own tech “unicorns” to shout about.

This is obviously great news for a nation that is keen to be seen as one of the leading players in the global technology race.

The UK also boasts several more established tech firms with valuations closer to $10 billion, including Cambridge-based chip architect ARM and big data giant Autonomy, which was sold to HP for $11 billion in 2011.

$1bn vs $100bn

However, if the UK wants to contend with the US and Silicon Valley in particular, it now needs to start creating the next $100 billion companies to riva the likes of Apple, Google and Facebook.

To complicate matters slightly, some of the UK's most promising contenders get snapped up by Silicon Valley heavyweights, as we saw in the case of HP/Autonomy and Google/Deep Mind.

But why didn't Mark Zuckerberg sell Facebook or Travis Kalanick sell Uber? They could have got rich quick and never had to work another day in their lives.

Many believe there is a difference in mentality between US and UK entrepreneurs. The former want their businesses to be as big as possible, while the latter is happy to hand over the reins when their company reaches a certain size.

However, I think today's UK entrepreneurs are starting to become more bullish and setting their sites higher. Take Huddle CEO Alastair Mitchell, for example. The Southampton University graduate is going head-to-head with Box CEO Aaron Levie, whose company IPO'd on the New York Stock Exchange last week for a mouth-watering $2.7 billion.

I'd say give it another decade and the UK might just have a Google of its own.

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