Note: The article was first published on TechNode China written by Penghui Li and translated by Zinan Zhang and Jake Newby.
Attempting to summarize the current state of the international tech industry is a tricky business. On the one hand, venture capital is down and layoffs are considerably up; on the other, there is huge excitement within the industry at the potential of new technologies such as generative AI.
According to data from Crunchbase, during 2023, total global venture capital is expected to reach its lowest level in five years at $285 billion, a 38% decrease from the $462 billion seen in 2022. Meanwhile, layoffs are also occurring more widely. Statistics show that the number of redundancies at global tech companies increased by 59% in 2023 compared to the previous year, affecting 262,700 people.
Yet with the rise of artificial intelligence technology represented by ChatGPT, the industry is also awash with unbridled excitement in certain quarters. Data indicates that the total financing amount for global artificial intelligence startups reached nearly $50 billion in 2023, a 9% increase over the previous year. Among them, just three companies – OpenAI, Anthropic, and Inflection AI – raised $18 billion.
It’s not only artificial intelligence. In industries such as augmented reality, brain-machine integration, and quantum computing, the technology field is also showing significant progress. From this perspective, as a home to global cutting-edge industries and an important springboard for corporate globalization, London has become a key focal point for tech companies.
London: A new hotspot for technology and climate innovation
Despite a particularly challenging period for the tech sector, London is still full of bright spots, according to Zhao Bingbing, Chief Representative of Greater China at London & Partners.
Zhao points to the GenAI boom as an example of the UK capital’s status. In recent years, investment in generative artificial intelligence companies in London has exploded. In 2023, the total financing of GenAI startups headquartered in London reached $232 million, 20 times the total financing amount in 2020. Among them, AI video company Synthesia and AI decision-making company Quantexa have joined the unicorn camp.
At the same time, established companies in the artificial intelligence field are also turning their attention to London. In June of last year, OpenAI, the developer of ChatGPT, chose London as the location for its first overseas office. OpenAI emphasized that the British city has a “vibrant technology ecosystem” and “outstanding talent.” CEO of Open AI, Sam Altman, further highlighted, “We see this expansion as an opportunity to attract world-class talent and drive innovation in AGI development and policy.”
Beyond AI, climate technology has become another highlight of London’s technology industry. Zhao states that London has always been an advocate and leader in the sustainability field. The UK capital set a goal a few years ago to become a zero-carbon city by 2030 and a zero-waste city by 2050. With strong policy support, “London has become the ideal ‘experimental field’ for international scientific and technological innovation companies in the sustainable technology field,” Zhao says.
London’s climate technology companies raised a total of $3.5 billion in 2023, a significant increase from the $2.2 billion amassed in 2022. Zhao emphasized that last year, London & Partners helped 100 scientific and technological innovation companies from around the world land in London, of which 23% were in the climate technology field, doubling the number who they helped bed in 2022. These companies created nearly 1,000 job opportunities, a 200% increase compared to the previous year. The firms included BYD, the world’s largest electric vehicle manufacturer, which also chose London as its UK headquarters.
From garnering attention to leading change
London’s attractiveness as a tech hub has seen funds pour into the city from around the world.
London startups raised over $12.9 billion in venture capital in 2023, the highest of any European city and almost equivalent to the total of the following three European cities (Paris, Stockholm, and Berlin). This was part of a trend that has seen London’s VC investors raise more than $24 billion in the past three years, accounting for over 30% of the total VC funds in Europe over that period. In addition, London continues to welcome the entry of many influential investment funds including A16z, Antler, BDA Partners, as well as Sustainable Ventures, Octopus Ventures, and 2150, while global venture capital companies such as Index Ventures, Lightspeed Venture Partners, and Sequoia have recently set up important institutions or new funds in the city.
Zhao says that London Tech Week, held annually in June, has played an important role in building the UK capital’s technology ecosystem. The event brings together leading companies, founders, investors, government agencies, and future talents from around the world to discuss the most urgent issues facing business and society.
Zhao’s firm, London & Partners, has long provided diverse community activities for companies registered in London, helping companies – especially small and medium-sized scientific and technological innovation companies – better integrate into the city’s mature business ecosystem and connect with broader resources. Zhao emphasizes that London is increasingly becoming a gathering center for major companies and institutions.
London & Partners have organized community activities like “Meet the Investor” and “Meet the Corporate” to connect scientific and technological innovation companies seeking financing with investment opportunities, or to provide platforms for companies to connect with institutions and large enterprises. Recently, the firm has organized an opportunity for financial technology companies to exchange ideas with the Financial Conduct Authority (FCA) in London. Zhao notes that “In London, our community activities also emphasize internationalization. In addition to our Grow London Global program to support the internationalization of enterprises, the London Tech Week in 2023 attracted participants from 168 countries and regions, as well as many national pavilions — such as from the Netherlands, Germany, Dubai, Poland, and Pakistan — showcasing the development of their respective scientific and technological ecosystems.”
Since its founding in 2014, London Tech Week has helped the UK capital’s technology ecosystem develop into an important center for nurturing startups and growing companies. According to data from Dealroom, the value of London’s technology ecosystem has grown enormously over the past decade, from $70 billion in 2014 to $621.5 billion in 2023. At the same time, since the founding of London Tech Week, London’s technology companies have raised a total of $107 billion.
Helping Chinese companies continue to tell good stories on the international stage
From high-tech products such as robots, EVs, and drones to new overseas territories represented by Latin America, the Middle East, and Africa, from the sweeping presence of Shein in the global fashion retail landscape to the rise of MIXUE Ice Cream & Tea in Southeast Asia, there’s a new wave of companies looking to go overseas.
In this context, it is not hard to see the importance of London as a global springboard for companies that have already joined this journey or are considering including overseas markets in their future expansion plans.
Zhao states that in the past year, London & Partners has helped 20 science and technology enterprises of different scales from the Greater China region to settle in London. In addition to BYD, the world’s largest electric vehicle manufacturer, the agency has provided assistance and support for PingPong Payments, a financial technology enterprise headquartered in Hangzhou, to expand its UK business. From an industrial perspective, these Chinese enterprises come from different industries. London & Partners have also worked with firms from the creative technology, industrial digitalization solutions, and biopharmaceutical industries.
“2023 was a fruitful year for the Greater China region,” says Zhao. “In 2024, we hope to continue to assist more Chinese enterprises planning to go global, enabling them to better integrate into the science and technology ecosystem of the UK and London, benefit from London’s mature and well-established international business ecosystem, smoothly settle in London for development, and expand internationally from London as a starting point. At the same time, we will continue to seek suitable platforms for Chinese enterprises, such as London Tech Week, the GROW Summit, and other technology or industry-related events, to help Chinese enterprises tell their stories on international platforms.”
