London: The New Startup Capital

London. One of the most influential cities in the world; almost unrivalled as a global hub for knowledge, talent and creativity. The UK’s capital city may have overlooked the importance of startups in the past but the city has transformed its attitude to young, hungry entrepreneurs over the past five years. Despite a slow start, London now invests serious effort into attracting talent to join a thriving startup scene and has become the world’s third largest startup hub.


What are the factors that make London such an attractive base for startups?

1. Great location

Geographically, London is perfectly placed. It benefits from European integration but is also lucky enough to have the location and time zone that allow businesses to link seamlessly with Asia and North America. As a result, London has phenomenal access to international markets; this plays a major role in its commercial success. A large number of Fortune 100 corporations, such as Shell, GlaxoSmithKline and HSBC, have their headquarters in London. The city has already established itself as the world leader in the FinTech (financial tech) industry, largely due to its status as the financial capital of Europe. Startups will find themselves in close proximity to a sea of potential clients, investors and support.

2. An encouraging business environment

The UK is one of the best countries in the world in which to form a business because of its political, economic and legal stability. The government contributes with national enterprise campaigns, such as Start Up Britain. The private sector has also started enthusiastically reaping the rewards of support for startups. John Lewis, one of the largest retailers in the UK, set up its own startup accelerator in 2013, becoming one of an estimated 36 incubators and accelerators in London. Startup incubators are also supplemented by dozens of productive co-working spaces, many imported from the US.

3. Pro-business tax incentives

The UK government has devoted significant resources to developing a progressive tax system for small businesses. The UK has a corporation tax rate of 20%; relatively low in comparison to other developed Western countries. The Conservative government also recently announced further cuts, planning to reduce the corporation tax rate to a highly competitive 17% by 2020. The government offers tax relief on research and development efforts and the incentive of favourable capital gains tax laws for entrepreneurs.

London boasts a world-leading financial centre.

4. Improved access to investment

Availability of capital is essential to any startup hub and London benefits from having a wealthy financial centre. Venture capital investment in London has skyrocketed over the last five years. In the first three quarters of 2015, London tech companies raised $1.6 billion in venture capital; a ten-fold increase since 2010. The Seed Enterprise Investment Scheme was a significant step in reducing the risks associated with investment in startups in the UK. Although US startup investment remains in a different league to London, the precedent suggests that London has the potential to get close to matching the magnitude of investment in Silicon Valley and New York.

5. A lot of talent

What started as Silicon Roundabout in East London has now transformed into the fully-fledged Tech City, home to thousands of tech and digital businesses. Huge multinationals such as Google convene alongside fledging startups and venture capitalists, creating a thriving business environment for startups. Five of the top 100 universities in the world are based in London, with Oxford and Cambridge only a couple of hours away. This provides a constant stream of skilled workers to complement the large existing skilled workforce. If the UK decides to stay in the EU, this will guarantee unlimited access to 400 million workers from across the EU — a larger talent pool than the USA.


London has so much more to offer than pure financial prowess; media, fashion, marketing and other creative industries will all play a vital part in developing London’s flourishing startup ecosystem. Having battled to remain as one of the world’s most successful major cities for the past 300 years, London certainly isn’t afraid of competition. The future is bright.