“This is an incredible time for technology firms in our city”

CityAM reported yesterday that fundraising in London’s tech sector is currently up over 30 per cent on last year’s $719.3m total, and there’s still three months still left in 2014. The figures are from London and Partners, the Mayor’s promotions agency.

Mayor Boris Johnson said:

These figures show, without any question, that this is an incredible period for technology firms in our city

And I have to agree.

To repeat a brief history of the UK venture industry that I’ve given before – the startup ecosystem only got started in the UK in the mid to late 1990s and was pummelled by the April 2000 internet crash when it was still in its infancy. We’ve been growing and recovering since then, but the markets have been tough and we’ve been subscale. The number of good entrepreneurs and quality startups has steadily increased, but this is a two sided market, and the other side, the capital, has been slower to grow. The lack of cash has restricted the growth in the number of startups and often resulted in those that do adopting more conservative growth plans than they would in a market where capital flowed more freely, like it does in California.

Things are definitely getting much better. I don’t think we will know we’ve reached critical mass until we are definitively past it, but it’s starting to feel to me like we might be close. Government support in the form of EIS and SEIS, and support to the VC industry has been critically important in recent years and this year we’ve had a slew of big exits – Zoopla, AO and Just-Eat all IPOd this year for over £1bn. That coupled with a hot economy is, I think, what’s making the difference.

We do, of course, have to be careful of irrational exuberance. If we end up in another bubble followed by a crash we may well find ourselves set back a few years. I don’t think we are at that point now though.