Leaders at Tech City firms say their companies are struggling to gain capital, and are sometimes having to make people redundant as a result.
A third of Tech City's business leaders said that their companies were hampered by a lack of capital - both from institutional or private investors.
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The Tech Futures Report carried out by market research firm GfK in conjunction with business advisers Grant Thornton UK LLP, found that 29 per cent of respondents believed their company was missing significant business opportunities because they cannot secure funding in time. Most worryingly, 19 per cent said they had to make people redundant because they couldn't secure the necessary funding.
The research found that Tech City firms each use about three sources of capital on average, with angel investors, venture capitalists (VC) and borrowing against personal assets being the most popular forms of finance.
But there were additional challenges in gaining more funding to further growth. Of the 43 per cent of firms who have raised further capital, almost a quarter (23 per cent) had issues such as the length of time it took to secure the funding.
The issues with funding that Tech City firms face echo the views of former Autonomy chief Mike Lynch.
Lynch hit out at the City for failing to back technology firms, describing the funding community in the capital as dysfunctional.
"In the venture capital world, London is considered dysfunctional," Lynch told City A.M.
"If you're [an investor] and get [a firm] up to £100m value you sell it to a larger company and move on, you don't float. The community has been so battered so they tend to sell out, or they build it up and take it to Nasdaq," he added.
Funding is not the only issue that London technology start-ups are facing. Almost half (45 per cent) of respondents of the Tech City survey said a shortage of skilled workers is the biggest issue they face, with 77 per cent stating that they could grow faster if there were more skilled people available and 42 per cent of Tech City businesses stating that they found it hard to retain their best talent.
