LONDON: Mike Lynch, who sold software firm Autonomy to Hewlett-Packard for $11 billion, is backing a start-up focused on augmented reality - the ability to overlay information on a real-world background which some see as the next big digital craze.

The technology aims to help a device such as a mobile phone to recognize objects in the real world, such as a building, and overlay relevant information onto the image on its screen.

The start-up, called Taggar, allows people to share video and other content they have tagged to objects, Lynch said.

The undisclosed investment is the second by Invoke Capital, a $1 billion fund set up by the British entrepreneur after he left Autonomy last year just seven months following the HP takeover that netted him about $760 million.

Lynch is now focusing on commercializing science and mathematics technology coming out of British universities, which he calls "techy tech".

"I am a great believer that techy tech and creative tech need to talk to each other a bit more, on both sides," he said in an interview.

"We are good at both of them, but the sad thing is in the past they haven't leveraged each other enough."

The brains behind Taggar is an algorithm developed by Cambridge-based Neurence that can recognize and make sense of images, and then overlay content like video on top.

Anybody can create and add content, and it is this social aspect that sets it apart from other augmented reality apps, according to Charlotte Golunski from Invoke.

The launch of Taggar comes on the third anniversary of London's Tech City, a government-backed initiative to create a cluster of tech business in the capital.

Joanna Shields, the former Facebook executive who heads the Tech City UK organization, said the growth of digital companies in the city had "been nothing short of phenomenal".

"The London economy now has another strong sector, in addition to financial services we've now got the tech digital sector," she said in an interview.

Tech and digital businesses created 27 percent of all job growth across the capital in the last three years, she said. And 159 tech and digital firms had moved into East London in the last three years, according to a report published on Friday.

Shields said that as well as start-ups, she was focusing on helping businesses scale up so they had the option of listing in London, something that has proved elusive so far.

The London Stock Exchange announced a new UK Digital Services Index on Friday that would benchmark companies operating in the sector to attract more interest from investors.

Shields, however, said listing was not the necessarily the best outcome for every tech company. "There's also a massive M&A opportunity growing in London," she said.

Lynch, who advises the government on science and technology, said creating technology clusters, whether in East London, or in Cambridge, was the right approach.

"There was an idea that you could do this stuff anywhere, so you had a nanotechnology center set up in every Welsh valley," he said. "(The government) has now realized you need to leverage off the clusters."

The HP-Autonomy deal, which was hailed at the time as a major success for British technology, was later tainted by accusations of accounting fraud.

Lynch, who has strongly contested the claims, said he had heard "remarkably little" from the authorities, including the US Department of Justice and Britain's Serious Fraud Office, in the last year.

"We are still sitting here waiting to hear what this is all about," he said. "It's an absolutely bizarre situation to us."