14 VCs discuss COVID-19 and London's future as a tech hub

The UK has created 63 tech unicorns in the past decade (according to Dealroom), and it almost goes without saying that the vast majority of those companies were based out of London, the country’s largest tech hub.

Famously, London’s DeepMind, an AI startup, was acquired by Google in 2014 for $500 million, but it has resolutely refused to move to Silicon Valley; founder Demis Hassabis says the city’s diversity of talent meant the powerhouse needed to stay put.

London has produced fintech upstarts like Revolut, Monzo and Starling and attracted early Skype team members who went on to create TransferWise. In 2019, London’s startups received $9.7 billion in venture capital funding, more than Berlin, Paris, Amsterdam and Madrid combined.

Furthermore, last year Pitchbook found that up to $4.4 billion worth of deals had involved at least one U.S.-based investor, with London receiving over $12.5 billion from American investors in the previous five years – almost twice as much as Berlin (on $6.5 billion of investment from U.S. VC firms).

Brexit uncertainty may impact startups’ ability to recruit and sale, and the UK government’s points-based system for immigration is unlikely to satisfy the industry’s voracious appetite for talent. But London is a tech supertanker that other European cities are unlikely to be able to match any time soon, Brexit or no Brexit.

But in the era of COVID-19, will major hubs like London still be able to attract future tech unicorns, and will these be in the same sectors as before? Will geography be replaced by mere time zones?

We surveyed many of London’s top VCs to get their insights. Here’s who we heard from:

Ruth Foxe-Blader, partner, Anthemis
Yana Abramova, partner, Pretiosum Capital
Leila Zegna, co-founding partner, Kindred Capital
Rob Moffat, partner, Balderton Capital
Nic Brisbourne, managing partner, Forward Partners
Sean Seton-Rogers, general partner, PROfounders Capital
Simon Murdoch, managing partner, Episode 1 Ventures
Nenad Marovac, founder and managing partner, DN Capital
Andrei Brasoveanu, partner, Accel
Jan Lynn-Matern, founder and partner, Emerge Education
Rob Kniaz, founding partner, Hoxton Ventures
Harry Briggs, partner, OMERS Ventures
Hussein Kanji, founding partner, Hoxton Ventures
Eileen Burbidge, partner, Passion Capital

Ruth Foxe-Blader, Anthemis

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

Neither our investment thesis, nor our geographic focus has changed: we are a global investor, focused on the U.S., UK and Europe. We are filtering, even more, for the best founders, as geography feels less important in lockdown.

From that, what do you expect to happen to the startup climate in London longer term, with the shift to more remote work (post COVID-19), possibly from more remote areas. Will London stay a tech hub or will the ecosystem become more dispersed across the country?

As a global financial hub with substantial infrastructure (including capital) designed to support emerging technology, London will remain a critical node in the fintech ecosystem.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

We’re anticipating a pretty substantial change to working norms, at least over the near term (6-12 months). The long-term impact is likely to level the playing field for great founders operating outside of established tech hubs. Remote assessment of companies, while challenging, has the potential to create more equitable investment practices.

As a global financial hub with substantial infrastructure (including capital) designed to support emerging technology, London will remain a critical node in the fintech ecosystem.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

To the extent that culture, regulation and capital play a large role in favoring certain types of economic activity, I expect existing tech hubs to remain important bastions of innovation. That said, I think we will see the rise of complementary tech hubs, as well as teams “in the middle of nowhere” emboldened to start great companies.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Given the proximity to the City and the heritage in financial technology innovation, the London tech ecosystem will continue to produce great fintech and insurtech companies.

Yana Abramova, Pretiosum Capital

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

Our strategy is to look at the companies across the UK, Europe and Israel. We cannot change our approach, but at the same time, we have always had a strong local UK network and are lucky that the UK harbors a large number of great entrepreneurs. We also have a very distributed strategy in our approach to the market, using our partners across the globe, so that does give us reach locally but also abroad.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

Long-term, we want to believe that while certain things will change, the reality is that certain sectors can only exist globally. As I said before, we are lucky that we sit in an entrepreneurial hot spot, but will continue to follow companies across the world.

Tech companies are by definition digitally-driven. Many of the companies that we are involved in had partial telework already and this saw little operational challenges. Our world is well-prepared for this.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

There always have been tech hubs, but they have always tended to be sector-driven. Meaning, a successful company in one sector attracted similar companies because often they need support. Early employees leave the company, stay locally, and start something of their own. We might see a bit more geographically focused hubs but the reality is that we won’t see a massive change in this.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

This crisis has highlighted or created a number of market tensions or opportunities in the VC world. Clearly the level of stress-related health issues has seen health-related companies do well, to very well – especially those around well-being. We have of course also seen massive growth in home-working related tools and companies.

We don’t believe that this growth level is obviously sustainable, but the trend, albeit smaller, is here to stay. On the other hand, clearly one of the darlings of the VC scene has been severely hit by the crisis and was already a bit battered before — the sharing economy.

By definition, this crisis will affect any business that is about sharing places, tools, cars or anything that could act as a viral transmission factor.

Any other thoughts you want to share with TechCrunch readers?

The main thought is that while COVID-19 has changed things and some see it as the creation of new opportunities, don`t let that fool you. Human beings are social animals by nature and will not accept certain things over a long period of time, so don’t bet too much on opportunities that are related to our current behavior. It isn’t natural to us.

Leila Zegna, Kindred Capital

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We always had a focus in our core market (i.e., the UK) but never a strict mandate, and have done about 20% of our deals outside the UK. Covid won’t change that for us.

We’re still looking for the top founders across Europe, with a focus on the UK as that’s where our brand is most known, where our networks are strongest, we can be most hands-on and helpful to founders, and where we think the bulk of top talent tends to gravitate to in Europe.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

We’d expect to be roughly the same split – 80/20 local versus Europe-wide.

Our expectation is that remote work will play a role in company building going forward, but not THE role. I.e. remote work will be incorporated in company’s working styles and cultures, but it will be mixed with in-person immersive work as well, to get the best of both worlds.

So we don’t have a thesis around London losing its center of gravity in terms of density of great tech companies — we feel it will continue to remain a tech hub, but people may be more open to commuting into the city if they only need to do it 2-3 times per week.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

Yes, I still think tech hubs will persist. In the same way that Silicon Valley is still a center of gravity for the tech world globally, but that doesn’t mean that exciting hubs don’t exist elsewhere (e.g., London, Berlin, New York, etc.).

Similarly here I think London will continue to be a “tech hub” but we may see other hubs cropping up as a result of talent being more open to moving outside of core big cities (e.g. Oxford, Bristol…). But we feel that collisions of talent in dense physical proximity has and will continue to play a role in medium to long term value creation.

Are there particular industry sectors that you expect to do uniquely well or poorly locally?

There are industries where physical presence is required (e.g. biotech companies with lab operations) and those may benefit from local presence given people’s need to be physically in an office or lab.

Complex multidisciplinary undertakings can also benefit from in-person time, as there’s a “serendipity of information sharing” that can occur in those settings and be critical for tech development across what could otherwise be siloed functions.

Any other thoughts you want to share with TechCrunch readers?

This too shall pass! And then we, as a community and as an ecosystem, will have the opportunity to keep some of the good from the experience, and leave the bad :)

Rob Moffat, Balderton Capital

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We invest across Europe. Historically we have probably over-indexed London as most of us live here, although definitely less so over recent years. Coronavirus should accelerate this. Not expected to fly out to Talinn/Bucharest, etc., so it’s much easier to jump on a Zoom.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

Less locally-focused.

I think companies will drift back to offices in 2021, so we back to long term very gradual trend of more remote work. But would love to see more happening outside London.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

Yes. I think people come back to offices and even if remote they want to meet physically monthly or more often. So we end up back at hubs. But arguably anywhere within two hours of Central London is a hub — Brighton, Oxford, Cambridge, Tunbridge, Wells.

Nic Brisbourne, Forward Partners

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We are still investing in UK companies only. Our USP is operational support and I still expect that face-to-face contact will be an important feature of effective help.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

I expect we might be less locally focused, but not dramatically so.

I think the ecosystem will become more dispersed. London will remain a key hub, but it will become easier to access it effectively with less presence here.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

Covid has shown us that remote working is more effective than most people thought, but I’m wary of over-extrapolating from the couple of months of data points that we’ve seen.

In the depth of a crisis it’s very easy, natural even, to think that more things will change than eventually do, and that’s the point we are at now. It seems to me that key ecosystem activities like building trust networks and high intensity creative work will continue to be better done face to face, for a while at least. If I’m right, then the key startup hubs will stay strong.

Sean Seton-Rogers, PROfounders Capital

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We will continue to invest across Europe. We believe that there is expertise across the continent, and we want to fund and support that talent. We do believe that in-person meetings in one geography will happen soon but that international travel will be curtailed for a while.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

“Hope for the best, and plan for the worst.” We are planning on no international travel until late 2021, and therefore revisiting our stage, geographic, and vertical focus.

However, I am hoping that either we have a vaccine soon or that we see the costs of a lockdown outweigh the benefits and a sense of normalcy returns soon.

In that case, we have used this time to strengthen the relationships we have with angels, early-stage VCs, and later-stage VCs that are in our network. Clearly, adding to a network is more difficult right now.

Of course London will remain a tech center, but perhaps its power relative to other cities in the UK and in Europe will diminish. Frankly, that was already happening as London was first mover in Europe.

However, Berlin, Stockholm, Barcelona and others were on the rise before COVID-19. This will only exacerbate the situation. Within the UK, it would actually be good to have other cities “step-up” – in Germany there are four hubs (Berlin, Munich, Hamburg, Cologne) and in Iberia there are three (Lisbon, Madrid and Barcelona).

Simon Murdoch, Episode 1 Ventures

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

As an Enterprise Capital Fund, we have always focussed on investing in UK based companies, and most of our investments happen to have been in companies founded in London and the South East. Our regional focus remains the same even though we are only meeting founders over Zoom at the moment.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

Longer term, I would expect our UK focus to stay the same for the next few years with possible expansion to some Europe-wide investment in the longer term, i.e. Covid is not affecting us at the moment.

We expect London to continue to be a tech hub, but Covid and Brexit will diminish its ability to attract entrepreneurs from other countries to come here to start or grow their businesses – which is disappointing.

London will stay a tech hub but Covid is helping us all realize that working remotely is more effective than we expected. So in future, more companies will rely less on office bound work, ie more employees will work remotely for part of their week, and more employees will work remotely all the time – being located across the UK and more often anywhere around the world. This will dissipate the power of tech hubs, including London.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

London is very strong for finance – both for raising money for entrepreneurs and their companies and also for fintech. This will continue.

Any other thoughts you want to share with TechCrunch readers?

Covid may be a once-in-a-lifetime opportunity to build truly global startups, i.e., many more startups might adopt the open source paradigm of globally distributed teams working together to build their companies without ever meeting in-person.

Nenad Marovac, DN Capital

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We are always looking pan-European and in the U.S. No change.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

No, we will continue our sector- and thesis-driven approach in [the] U.S. and Europe.

Maybe more interesting deals will come from remote areas. More from Eastern Europe.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Locally: anything in delivery, logistics, online education, marketplaces, digital payments. Bad locally: retail, restaurants, agriculture as restaurants and hotels not buying, travel, entertainment.

Any other thoughts you want to share with TechCrunch readers?

This will be interesting times. There will be new business models emerging addressing the “new new,” and the key is to spot those early. Also, Covid will cause a lot of pain in society and we need to give back and be conscious of this.

Andrei Brasoveanu, Accel

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

Local investing is a huge focus for us, and we continue to nurture and develop the strong local relationships we’ve developed over two decades in London and Europe, from founders to seed investors, angels, incubators or universities.

While Accel is a global firm, we’re unique in our on-the-ground local presence and find we can be most helpful to founders when we have a deep knowledge of their local ecosystems from the earliest stages. In addition, we’re also geo-agnostic and keen to engage with and back founders stemming from any country or city, as we’ve done with Atlassian in Australia or UiPath in Romania.

Hence in some sense the remote context is further breaking any distance barriers and makes it equally easy for us to engage with founders across the world, as everyone is a Zoom call away.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

Once the world returns to normal, we do think the local facet of our work will continue to be important. Founders will continue seeking an investor partner with a global footprint and network but with local empathy and context. Hence we’ll continue doubling down on both fronts.

London has been one of Europe’s strongest startup hubs and a magnet for strong commercial, product and technical talent. We expect that to continue post-COVID, as it’s a great city for ambitious would-be entrepreneurs and startup employees to pursue their dreams.

London has also had historical strengths in areas such as fintech, AI, cybersecurity and consumer internet, and we expect these areas to continue developing given the growing number of repeat entrepreneurs and angels building the next generation of startups.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

Yes. A tech hub brings a powerful entrepreneurial community together, combining all stakeholders such as founders, investors, talent, customers and service providers. As tech’s relative share in the economy continues to grow, we see traditional tech hubs continue developing.

Success breeds success, and we also see rising generations of founders and operators benefitting from the mentorship and backing of successful earlier generations of entrepreneurs and talent.

If anything, there could be new “remote” tech hubs emerging, especially in areas/sectors which are highly remote-native, such as open-source software.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Beyond initial sectors that have gotten a strong tailwind, such as remote work collaboration or telemedicine, we see continued growth in must-have areas of software which are serving resilient needs for enterprises.

Think process automation driven by a continued push for efficiency, or cybersecurity driven by an ever-expanding set of attack vectors, especially in a remote work context. On the consumer side, we see an accelerated shift from offline to online, with areas like mobile consumer banking or retail investing decidedly capturing the mainstream.

Any other thoughts you want to share with TechCrunch readers?

Some of the most enduring, iconic tech businesses have emerged in periods of immense dislocation, and we’re excited to partner with founders who have the ability to see around corners and reimagine what the world will look like post-Covid, and help them change it for the better.

Jan Lynn-Matern, Partner, Emerge Education

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We are still focused mainly on European founders.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

Less.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

Timezones will be more important dividers than geography.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Education technology is already doing uniquely well.

Rob Kniaz, Partner, Hoxton Ventures

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

No difference to normal. Prob doing more non-local investing than normal honestly based on dealflow. Local VCs in smaller locales seem even hungrier than ever to partner with UK funds.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

We’ll follow the deals. Nothing to do with COVID, if the deals are local that’s a big plus but happy to do lots of remote on conference calls/Zoom as needed.

I think the HQ will stay in London but certainly people will feel more flexible working from home. I suspect more older/established founders will keep their mini-HQ at home or closer to Oxford/Cambridge and commute into the city offices where more of the junior folks will be working day to day.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

I think the hubs will follow the money and the money ain’t leaving London.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

I don’t think anything is unique locally. TBH. Same sectors globally or at least as every other city. Delivery will recover and expand in London as consumers are hungrier than ever for deliveries and traditional shops/restaurants realize that they have to offer delivery.

Most places that were adamantly non-delivery restaurants and shops (like cupcake stores) are now fully embracing delivery and I don’t think that goes away.

Harry Briggs, Partner, OMERS Ventures

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We’re trying to cover Europe from our London team (we also have teams in Palo Alto and Toronto who cover North America), so in some ways the shift to virtual meetings has reduced friction for founders in e.g., Estonia or Hungary, where we wouldn’t have visited so frequently in person.

Naturally our networks are still strongest where we already have the best in-person relationships, so dealflow skews towards London, Berlin. etc., but we’ve also been investing in proprietary “signals” which flags about 20-40 promising companies across Europe for our team every week, regardless of geo.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

We’ve always wanted to be pan-European, but were constrained by sheer team-size and needed to focus on a few key cities to be efficient.

In the new world of back-to-back Zoom days, we’re hoping to cover more of the European landscape, with more thematic focus.

I think rumors of London’s demise may be exaggerated, dare I say particularly by the >40 commentariat (er, people not unlike me) who are already comfortable/established with their networks, not much fun any more, and have little downside moving to the Cotswolds.

The London tech ecosystem has always been driven by the young, the ambitious, the dreamers, who work hard, socialize hard, and will, I suspect, soon be making up for lost time. I hope that this gives other ecosystems (e.g., Manchester) more opportunity to “level up”, but I don’t see talent going fully remote for some time.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

Yes. People have always congregated around centers of talent, knowledge, customers and capital. The cards will be shuffled, the tunes will be different for a while, but the music will play on.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

We’ve been particularly hot on the future of health (e.g., our investments in FirstVet and another soon to be announced), the Future of Work (e.g., our investment in Quorso) and the future of logistics (e.g., our investments in Deliverect and another soon to be announced).

Happily all are seeing accelerating trends. But frankly I worry much more that the crisis has mostly benefited Big Tech, and had the greatest negative impact on the small businesses that are / were the beating heart of the city and who, frankly haven’t had enough of a voice during this crisis.

We now need an urgent and concerted effort to restore people’s confidence to start spending at the businesses that employ their fellow-citizens and generate wealth here in Europe. And we need to fund the European challengers and create a regulatory climate that allows them to flourish.

Hussein Kanji, Partner, Hoxton Ventures

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

Local investing: same as before. We just did a deal in Poland entirely virtually and are about to do one in the UK entirely virtually.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

Long-term: no real change. European focused. Find the best companies, invest early.

Tech hubs: still think more London centric vis a vis UK, and capital centric in rest of Europe. May be more dispersion, too hard to know or tell at the moment.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Industry sectors: travel and sharing economy will have some challenges. Deeptech (assuming you can build in a remote environment), intersection of tech and health will remain interesting.

But we have no idea where the next big thing is going to come from – if we did, we would’ve found it. We’re just not that smart. We just listen and try to get educated quickly, and write the check when we think it’s going to matter.

Eileen Burbidge, Partner, Passion Capital

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

COVID-19 hasn’t really affected how locally or afar we (Passion) look for founders to back. We continue to believe that investing in teams based closer to us in London are easier to catch-up with face to face which helps initially to establish trust, rapport and create a long standing relationship dynamic which will define what’s inevitably going to be a multi year partnership.

Naturally COVID-19 means we aren’t able to meet nor catch-up (after investing) with teams in person for a while, but we do look forward to when we can do that again, and it feels like teams which are easier to visit or vice versa will prove easier to collaborate with. Obviously at the moment we’re seeing everyone remotely and over video calls so it matters less right now, but we do think this will pass whether in 6 months or 12 months or more, and so we look forward to in-person meetings again.

With all of this said, we’ve always been open to investing in teams remote. In our newest Fund we’ve really excited to have backed teams based in London, Manchester and also Tallinn, Estonia.

Long-term, do you expect to be more or less locally focused, especially in light of COVID-19 or in other ways?

Long-term, we expect to continue to be more locally focused, but absolutely open-minded and opportunistic about investing in remote teams as well — as we’ve always done.

It’s my belief that London will continue to be a tech hub, although there will be a shift to dispersion or spreading people out a bit because of remote working and the shift that’s happened. Even so, London won’t even remotely disappear as a hub altogether.

Will there be tech hubs post-COVID-19? What is a tech hub now, by your definition?

Yes, I think so. Like London, I think there will continue to be other metropolitan areas or university centric hubs which have a density of talent, skills, experience and investment capital.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Unsurprisingly, I think the travel, hospitality and restaurant sectors will be the ones to come back last, but over time, I think everything will eventually come back.

Any other thoughts you want to share with TechCrunch readers?

We’ve seen a validation of the importance of tech enablement, digital inclusion (ensuring everyone has access to digital goods and services) and product provision offered online. In my opinion, this is not going to revert back to pre-COVID days — and tech is now even further entrenched as a vital necessity. It could be that the pandemic becomes the inflection point which leads to tech no longer being its own sector. The crisis will make sure that any business without any digital or tech enablement barely survives if at all.

Finally, these last few months have also finally shown a sea change in terms of awareness of systemic and institutional racial inequality (and hopefully inequities across all sorts of different demographics and affecting many people). I don’t think this will dissipate or recede after COVID-19 either and would celebrate this if I’m right. This is yet another inflection point and the impact on tech companies will be to ensure that unconscious bias doesn’t find itself in customer segmentation, targeting, marketing or design of digital/tech services.