I assume VC per capita is a used as a metric because it's a useful way of assessing how much economic value the whole country can extract from the startup scene, in the same way that GDP per capita is a more useful measurement than total GDP at assessing a country's quality of life. Israel may have a similar concentration of startup companies in a city (like Tel-Aviv) and the math would then work out to a higher per capita VC investment than London.

Actually the start ups in Israel are pretty spread out, the consequence of Tel Aviv's rent being high. Really high.

It's true that most of them are not in Tel Aviv, but they are far from being spread out - they are almost entirely within the a small section that includes Tel Aviv, Ramat Gan, Herzeliya, Natanya and the south end of Haifa - I guess that would cover 90% of Israeli startups (as well as established high tech companies), and about 15% of the Israeli population.

What does that look like if we just do the valley?

Can't find the data for the valley but I imagine it would be in the $1500-$2000 range.

The flipside of this is that Europe should probably not be compared to single countries like the US or Israel.

The comparable entities are North America, the Middle East and Europe. Then things would change.

Individual countries in Europe, particularly the Scandanavians, have loads of small IT companies funded from VC capital and as others have said government grants. The Dutch, the UK and Germany would probably also do reasonalbly well.

The comparable entities are North America, the Middle East and Europe. Then things would change. <-- No, here is why, if you're in Israel you have access to all that it has to offer, same for the US, and same for Europe (EU). The point is 'how much money is there to go around / potential recipient.'

Europe is far less a single economic block than the US or Israel. An American VC is far more likely to invest in a London based startup than one in say Germany, purely because of cultural and language barriers.

In that case wouldn't it be better to compare London to Tel-Aviv?

So what you're saying is that for the majority of cities in the UK the situation is even worse.

Well, that makes me feel better.

London's the heart of the UK's economy. That's why businesses put their sales offices in London, while the real work is done cheaply elsewhere in the country.