Mayor Launches £22m London Startups Fund

The Mayor of London, Boris Johnson, has launched a £22 million ($33 million) fund for London startups, backed by European Union money to go to firms with their headquarters in the city.

London’s Tech City will benefit from the money, which includes a grant from the European Regional Development Fund, and other money from SME Wholesale Finance Ltd. Those two pots add up to £11 million, that will be matched by venture capitalists, and handed out as “follow-on” finance for London startups that have already had seed funding.

Boris’ choice

London’s European Development money is in the gift of the Mayor, who chose fund manager MMC Ventures  in a competitive tender. MMC has already made five grants to London startups including holiday home-share site Love Home Swap and mobile ticketing company Masabi.

“London’s small to medium companies are a vital component of this city’s economy, supporting significant numbers of jobs,” said Boris Johnson.

“It is a top priority for me that these entrepreneurial enterprises receive practical support to thrive and grow, not least as many have the potential to become major employers in the future. This innovative equity fund is using public and private money in order to offer much needed financing when more traditional routes are not available.”

Although the government-backed Tech City initiative has produced plenty of help for start-ups at the “Incubator” stage when they are just starting out, there has been a shortage of “follow-on” or Series A money, which is typically given in chunks of up to £3 million to companies that are starting to make a name for themselves.

Masabi provides mobile phone apps which let passengers buy tickets and use public transport, while Love Home Swap is designed to let people swap their homes to get holidays abroad.

The fund will be announced today at City Hall, by the deputy mayor for business and enterprise, Kit Malthouse.

How much do you know about Tech City? Try our quiz!