London, home to unicorns such as Deliveroo, TransferWise, Farfetch and Funding Circle, has established itself as Europe’s tech powerhouse. As the level of venture capital funding continues to rise, eclipsing other major cities like Paris and Berlin, City AM recently reported that London is responsible for “37 percent of Europe’s unicorn-status tech firms and topping the list of global destinations for tech talent.”

It may come as surprising news because so much contemporary coverage focuses on the UK’s challenging economic circumstances, including high operating costs and Brexit’s uncertainties, which affect everything from future immigration policy to effective supply chains. However, with assets such as prestigious universities and extensive transport links, London has a solid appeal to businesses, ranging from SMEs to international conglomerates.

In this article, we’ll cover the factors which have made London an ideal location to launch a startup. Additionally, we’ll consider some of the challenges the capital faces and whether London will maintain its status in the future.

Availability of top talent

The UK education system is world renowned, particularly its academic institutions; they attract over 442,000 international students a year, which helps produce highly-skilled talent for the workforce. Aside from the education system, London is an immensely diverse city which attracts driven individuals from across the globe to come and ply their trade. Professionals are able to move between jobs, progress in their fields and access new opportunities, which can be found at industry meet-ups and conferences, collaborative co-working spaces and more. London now has more software engineers than several other major tech centres – Dublin, Berlin and Stockholm – combined.

A business-friendly government, legal and taxation system

London is one of the world’s easiest cities to do business. This is mainly due to its flexible employment legislation, low-cost legal structures, taxation and relief, and entrepreneur visas. The government also has many initiatives to help support startups, including a Start-Up loans scheme and a government body, Innovate UK, which financially supports and invests in many high growth businesses. Prime minister Theresa May has also pledged £2 billion in government investment by 2020 for businesses conducting research and creating technology in AI, robotics and biotechnology.

Global transport hub

London Gatwick and London Heathrow are two incredibly well-connected airports, allowing travellers to get to just about anywhere with a direct flight. The airports are also well connected to the city by public transport, making accessibility simple. If the recently announced Heathrow expansion comes to fruition, it looks set to secure London’s prime business position for years ahead.


London is the financial capital of the world for many reasons, but is certainly helped by its geographical placement between US and Asia. London’s placement means that it is open for business during a good proportion of the US, Middle and Far East’s working day. Although this is great for the banks, it has also been a pull for many other global businesses, such as Microsoft, Google, Facebook and Apple, all with major London operations which employ thousands.

Access to capital

With billions in VC funding raised in the last couple of years, London’s access to venture capital is growing at an exponential rate. London is home to the likes of Octopus Ventures and Index Ventures, which have both invested over $5 billion in UK businesses since they were established. London also has a number of high-profile accelerator programs including Seedcamp, Entrepreneur First, TechStars and Startupbootcamp.

Although London now holds the European crown, keeping it could prove to be a challenge; a number of factors are affecting the capital that may weaken its appeal.


The number one reason, of course, is Brexit. Brexit is likely to affect immigration policy, which may make it a lot more difficult for non-UK citizens to work in London, reducing the talent pool. There is also continued uncertainty around all things business, including access to the single market and customs union. Since Britain voted to leave the EU, the pound has also weakened dramatically across major currency pairs, like the dollar and euro, making imports a lot more expensive.

Property and cost of living

For both businesses and workers, London has astronomical property prices and rentals, which cut into each company’s bottom line and threaten to make the city unaffordable for residents. London has soared up the rankings to become one of the top 20 most expensive places to live in the world, making more affordable European tech cities, like Berlin and Dublin, increasingly attractive for entrepreneurs and workers alike.


London has a reliable, comprehensive transport system, with recent initiatives such as the Night Tube and the soon-to-open Elizabeth Line set to give commuters even more options. However, getting from the residential areas and the suburban home counties to the business districts of the City and East London can take much longer than other comparable cities. With this and the aforementioned cost of living to consider, London’s business-friendliness can clash with its livability, potentially putting off workers and businesses from setting up in the capital.

Despite the perceived risks, London has for years been a robust, desirable business destination, not only for tech startups, but for a broad range of businesses, from banking to healthcare. High costs and Brexit’s effects may serve to dent its position, but its spirit of progressive thinking, diversity and opportunity all look set to attract ambitious workers and businesses for years to come.