Measuring activity across private equity and venture capital deals, more than £6.7bn was invested into UK tech firms in 2016, with London accounting for more than a third of the total.
The research also shows that the UK remains attractive to investors despite the vote to leave the EU, with UK tech firms receiving more venture capital investment than any European country post-referendum.
UK tech firms have also looked attractive to deal-makers with a sharp rise in merger and acquisition (M&A) activity during 2016, with British companies seeing more investment than any other European country after 23 June.
Since the EU referendum vote, a number of the world’s leading technology companies have demonstrated their long term commitment to investing in London with Google putting forward a £1bn investment plan for a new headquarters in King’s Cross, Facebook announcing an additional 500 jobs for London and Apple revealing its plans for new headquarters in Battersea. Last week, Snap Inc, the company behind messaging app Snapchat, also announced it has established its international hub in London.
The Mayor of London, Sadiq Khan, said: "With our unbeatable blend of talent, creativity and access to finance, it is not surprising that London continues to go from strength to strength as the undisputed tech capital of Europe.
"Despite the Brexit vote, the capital continues to attract record levels of investment and remains the best place in the world to grow a business. I have no doubt that this important sector of our economy will continue to generate jobs, investment and world-leading technology for decades to come."
Eileen Burbidge, partner at London venture capital firm, Passion Capital, added: "The UK is undeniably a leading destination for investors, entrepreneurs and businesses alike. With a diverse talent pool, global financial centre and a strong culture of innovation, it is no surprise to see that the London has attracted more investment than any other major European city in 2016.
"Recent investments announced by the likes of Facebook and Google further demonstrates the strength of London’s tech sector and shows that London is still very much open for business and investment."
London-based tech companies again proved to be the most attractive European destination for venture capitalists with firms securing around £1.4bn of the total £1.9bn raised by UK tech firms in 2016. VC investors continued to pump money into London tech companies following the EU referendum, with London companies raising over £668m during the second half of the year.
London & Partners research also showed London’s strengths in cutting edge technologies, with adtech, e-commerce and big data firms attracting increasing amounts of investment in 2016.
Artificial Intelligence companies also benefitted from a sharp rise in venture capital investment in 2016, with London based AI companies receiving a record £100m last year, more than three times the £27m raised in 2014 and almost double the £52m raised in 2015.
2016 was also a record year for e-commerce investment into London tech companies, with a total of £486m across 69 deals. London based on demand food delivery company Deliveroo received more VC investment than any other company in 2016, securing over £210m in a series E funding round.
Will Shu, co-founder and CEO of Deliveroo, said: "Deliveroo now operates in more than 120 cities in 12 countries across the globe, but London is our home and we are extremely proud to be a fast growing British tech company. In 2016 we grew by over 400% and we have big plans for the year ahead.
"London is a world class city where we can attract some of the very best tech talent, access leading investment opportunities and operate in a fantastic work environment. Combined these factors continue to help the company grow and create more exciting job opportunities for Londoners."