The founders of used car search website Carsnip attended about 100 meetings in 18 months to raise the funding they needed – $100,000 of which was secured over the phone from a US investor.
Yet not a single penny of the 拢2m they raised over five rounds came from London, leading them to believe their geographical location gave them a disadvantage in the eyes of the capital鈥檚 investors.
鈥淚 spent a lot of last year in back-to-back meetings in London, staying in hotels and travelling back up to Nottingham, and I got questions like 鈥榓re you based in London?鈥� or 鈥榓re you going to move to London?鈥欌�� chief executive and founder Alastair Campbell told 老九品茶Cloud.
鈥淚鈥檝e spoken to experienced investors since who told me that the reason we didn鈥檛 get that investment was because we鈥檙e not in London.
鈥淓ven if they鈥檙e interested in the idea we have, we鈥檙e not there, which means it鈥檚 harder for them to see us face-to-face on a regular basis.鈥�
Campbell is not alone in his experience. BBC technology correspondent Rory Cellan-Jones spoke about the notion of 鈥榯rainophobia鈥� among venture capitalists when he appeared at a North West tech event earlier this year.
This, he said to the audience at Manchester Town Hall, referred to an apparent fear of getting on a train and leaving the capital to make investments elsewhere, and was damaging the technology industry in other parts of the country.
Campbell believes VCs in London are reluctant to hold Skype meetings, meaning they want the businesses they invest in to be closer to them.
鈥淭here鈥檚 also a myth that the best talent is in London because that鈥檚 where the money is,鈥� he says. 鈥淥ur US investor couldn鈥檛 care less where we鈥檙e based because they have a more flexible culture for investing over there.
鈥淭he thing is, if you鈥檙e going to be in London you鈥檙e going to need twice the capital because costs are higher, which means VCs will be risking more on the same business.鈥�