Andreessen Horowitz, the Silicon Valley group that was an early backer in Facebook, is investing $20m in Improbable, a London-based company that creates “virtual worlds”, as US venture capital continues to flood into UK digital start-ups.
One person familiar with the matter said the investment valued the three-year-old company at around $100m.
The investment is the latest sign of how British tech companies, particularly those based in the capital, are attracting attention from US venture groups. Last month, figures from CB Insights, a research group, revealed that London-based technology companies obtained $1.4bn in funding in 2014, with $795.2m from US-based investors.
Improbable creates systems for virtual worlds, enabling thousands of people to play complex computer games at the same time or allowing healthcare workers to simulate how a virus spreads across a city’s transport network. Its technology adopts techniques from high-frequency trading that means simulated worlds can run across a number of different servers and computers at the same time.
“This is a brand new technology, there is nothing like it at all,” said Mr Dixon.
Its 26-year-old chief executive, Herman Narula, founded the company along with fellow computer science graduates from the University of Cambridge. He is the son of Harpinder Singh Narula, the Indian construction billionaire.
Speaking to the Financial Times, Mr Narula said: “We have grand ambitions to create an operating system for an entirely new class of applications.”
The company employs 50 people, including former workers from major tech groups such as Google and Facebook and software engineers from financial institutions such as Goldman Sachs.
The company had previously raised $1.5m from a group of angel investors including Hermann Hauser, the Austrian entrepreneur who co-founded Acorn Computer in the 1970s, and Alex Asseily, co-founder of Jawbone, the gadget maker.
Mr Narula said the new funds would allow the company to keep hiring.
In showing interest in the UK tech sector, Andreessen Horowitz is joining the ranks of elite Silicon Valley investors that have begun to look favourably at deals across the Atlantic.
In January, the American VC group made its first investment into a European company, putting $58m into Transferwise in a funding round that valued the London-based money transfer group at $1bn.
Other Silicon Valley venture groups to invest in the UK tech sector include Sequoia Capital, which has backed Songkick, the London-based concert listings start-up, and Skyscanner, the Edinburgh-based travel search engine.
Cambridge has had a “very impressive run lately”, Mr Dixon said, pointing to DeepMind, an artificial intelligence start-up acquired by Google last year.
Improbable “is a company that had to exist outside Silicon Valley”, Mr Dixon said, because in the US tech hothouse it would have been advised to focus on selling its software to large corporate clients. “They started doing gaming then stumbled on the fact that the technology has all these opportunities outside gaming.”
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