Venture capital investment startups more than double in South Bank area
Venture capitalist (VC) investment into London-based startup companies to the end of Q317, is already 8.6 per cent ahead of the £2.6bn recorded for the whole of 2016, according to Workthere’s latest company data.
Workthere notes that startups in the South Bank and midtown - not generally recognised as core markets for these businesses - have seen a substantial rise in VC investment, with the number of deals transacted in these areas during 2017 expected to represent an average year-on-year increase of 105 per cent and 81 per cent respectively, since 2013.
These growth rates are similar to those seen in the traditional core markets like Shoreditch and the city core, with the number of VC investment deals into startups transacted in each of these locations expected to have risen on average since 2013 by 107 per cent.
Cal Lee, head of Workthere, commented: “The strong level of VC investment into startup companies across London is a positive and encouraging sign and demonstrates the strength of the capital as a leading location for these businesses, despite the uncertainty [of] Brexit.
“In addition, alongside Savills, we have identified a direct correlation between the rise in VC investment and increased take-up by serviced office providers, particularly in these less established startup locations.
“This is a trend that we expect to feed out into other submarkets that are not as populated with serviced office space, as the demand for flexible space to complement growing businesses continue.”
In line with increased VC interest, serviced office providers have identified an opportunity in the south bank and midtown in terms of targeting the startup community, having accounted for 314,695 sq ft and 158,019 sq ft of take-up respectively at the end of Q317.
According to Savills research, this reflects an increase of 133 per cent for the South Bank and 104 per cent in midtown when compared to take-up by these occupiers during the whole of 2016.
The firm notes that take-up by serviced office providers in the south bank to the end of Q317 is of particular note as it is just below that recorded at the same time in Shoreditch (316,371 sq ft), and significantly above the city core (133,672 sq ft), both of which are areas that have traditionally been the main startup clusters in London.
Steve Lang, director in Savills’ research team, concluded: “The London submarkets currently offer a strong alternative for new businesses and startups looking for short-term flexible and serviced office space as they establish their business in the market.
“We expect these communities to continue to expand across the capital as demand for this type of space grows as a result of VC funding.”