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A record number of Californian information technology companies including Google, MySpace and Bebo have opened offices in London in the past year, leading a surge of investment by foreign business in the capital.
There were a record 250 foreign direct investment projects into London in 2006, up more than 40 per cent on the previous year, according to new figures from Think London, the capital’s foreign direct investment agency.
The number outstrips activity during the dotcom boom in 2000, when 182 investment projects came to London from abroad.
Some 25 Californian IT companies invested in London last year, making them the largest identifiable group of foreign businesses coming to the city.
The US as a whole accounted for 54 per cent of projects, with Californian companies, including non-IT businesses, making up 15 per cent of all London foreign investment projects.
This compares with 10 per cent from India and 7 per cent from Canada, the next biggest investors.
In response to the influx, Think London recently opened offices in San Francisco, in addition to those in New York and Beijing.
Key projects include the rapid growth of Google’s UK operations during the last 12 months. The company now employs hundreds of UK staff and runs a significant part of its mobile and wireless development work out of its huge office complex in Victoria.
Some of the investments have been relatively modest in financial terms. Bebo, the social networking site, opened a UK office this year with the hire of a single executive, Joanna Shields, poached from Google. Sling Media, the video-streaming company, similarly employs just one person in London.
But such small beachheads can grow quickly. MySpace, a social networking rival to Bebo, sent three managers from California to London in January 2006. A year later it had an office of 55 people in Soho.
Californian IT companies say they see London as a centre for convergence of the technology and media industries.
The fact that many global media companies, advertising agencies and telecommunications operators have headquarters in London makes the city a good place for dealmaking.
Google, for example, has signed key deals with Vodafone, the UK mobile phone operator, and with British Sky Broadcasting, Rupert Murdoch’s satellite television business, in the past year. MySpace has done a deal with Vodafone. And Bebo is working with Orange in the UK on the first deal to give mobile phone users access to the social networking site.