*Don’t forget to pre-register for UnConvention2014, prime meeting of European innovation eco-systems!*
Welcome to London! “Throughout the week, tens of thousands of the industry’s top tech professionals will flock here to share brilliant new ideas, build business relationships and help cement London’s position as a top global tech hub”, said Mayor of London, Boris Johnson, in the inauguration of London Technology Week. From Monday to Friday, the city will be full of events and, as a part of our Roadshow, EYIF and the European Commission will hold a panel in Google Campus on funding opportunities and first-hand mentoring with successful entrepreneurs. Calypso Harland, founder of Dev Lab, Cary March, CEO of the social video site Mydeo, Valerie Mocker, senior researcher at innovation charity NESTA, Alice Tyler, Chief Design Officer at the renewable energy peer-to-peer online marketplace OpenUtility and Aubone Tennant, CEO of the Internet provider Wifinity, will be there.
Our StartUpShow is just one of the many tech events in London this week. But in weeks like many others, the tech scene is naturally alive, well and still full of things happening in the digital sector. In the last five years, London has reached the title of digital capital of Europe. According to a Mike Bloomberg study, “the growth of London’s tech/info sector from 2009 to 2013 was more than triple the previous four years”.
How did the city do it – and what can we expect for the future? We (re)visited the hub and reviewed what is going on.
Good policy. The official anecdote comes from 2008, when a Dopplr employee noticed that the grey Old Street Roundabout was filling up with tech startups. He said something like “if this goes on, some awful estate agent will start calling us Silicon Roundabout”. One year later it actually happened: Silicon Roundabout was the epicentre of the government’s Tech City Strategy. “It was just in the middle of the big financial crisis, when all the reporters started telling ‘but there’s people doing their own businesses. I remember thinking ‘oh, Government wants to take credit of the area. And I didn’t like it. But then I studied the story of Shoreditch and changed my mind”, tells us Ricardo, who was working in a startup at that time and now works for a co-working space.
Access to finance. Tech City Strategy included policies like tax breaks for investors, visas for entrepreneurs and tax exemption on the High Growth Segment. And what happens when you look at the numbers? In 2013, $ 929,1 millions were invested in venture capital in United Kingdom. It was the fourth economy of the OECD list in millions invested – just behind the USA, Japan and Canada. France, Germany and Sweden are the other three European countries on this list.
Easier business funding – than in the rest of Europe – is one of the keys that promote entrepreneurship in London. A recent piece by The New York Times told the story of Guillaume Santacruz, CEO of the desk space marketplace Zipcube, a French entrepreneur who moved from Paris to London to found his startup. “London was the obvious choice. It’s more dynamic and international, business funding is easier to get, and it’s a better base if you want to expand”, he said.
Vibrant communities. Santacruz, as well as many others, works from Google Campus, a free co-working space that Google opened in April 2012. It’s Friday afternoon. Google Campus is closed, but the party keeps on going at Silicon Drinkabout, a weekly meetup held in different locations – from discos to accelerators like Wayra, for people in the startup and digital sector. Like in Croydon, communities of entrepreneurs, makers and creative minds flourish all around. Coworking spaces also take care for connecting their members and giving them external expertise. “The idea is to help them grow”, tells Ricardo, who’s developed a network program for the based social enterprise The Trampery, that operates spaces for entrepreneurship and innovation. “I designed a research model, interviewed 45 of our more than 50 companies and with their responses I started programming open or member events around their interests: how to fund your startup, events about business development…”.
Silicon Drinkabout meetup, The Trampery events and Croydon Tech City community are just three examples of how tech and innovative groups gather. London can be a hard city for someone new, but this kind of groups make it welcoming. The urban diversity and talent that it attracts are also part of the ‘success story’.
It’s not all about the Roundabout. A big poster says ‘Where the City meets Shoreditch’. Shoreditch, part of the Hackney Borough, lies to the north of the City of London. The growth of the economy in the area, higher rents the closest the place is to The City and public policies towards startup scene had also downsides.
“Scattering Shoreditch’s startups to the winds may not kill them all – but the creative energy that inspired them has gone”, wrote Cory Doctorow at The Guardian. “Once the home of groundbreaking startups, Silicon Roundabout has been adopted by estate agents, local councillors and government”, he noted. Shoreditch is the main tech hub of the city, but it’s not all about it. As some young people move to the South due to lower rents, other areas embrace their technology scenes. That is the case of Croydon: Croydon Tech City is a community of developers, creatives, investors and founders making the area an attractive home to startups. One of the founders, Jonny Rose, explains that the idea came in the wake of the riots. Desperate to do something positive, he and the other two founders “began to make the connections between the tech companies and people they knew were in the Croydon area”.
Fashion, mobility and fintech. London is not Silicon Valley. “We’ve been making this point about London’s differentiated strengths for years, and after getting bored of just saying this, we’ve tried to put some data behind it”, wrote James Wise, an early stage investor. To understand the different faces of the city’s technology companies – which live together with other big and concentrated sectors, like media, fashion or finance – he did some analysis to conclude there are seven main ones: fintech, e-commerce, digital media and marketing, mobile apps, marketplaces, SaaS and social apps. Of those, he highlighted fashion – founded in 2000 employing 4000 people, ASOS is a good example of the intersection between digital and fashion economies – and mobile movers – like Citymapper, Hailo or YPlan.
As a financial capital, London is also a major hub for big data and financial technology. The sector includes companies such as WorldRemit or Transferwise, probably the ‘hottest’ startup in London. Founded by former Skype employees, is a P2P money transfer service that allows users to avoid bank fees. And according to the Bloomberg study, there are 44,000 fintech workers.
How will London continue growing? While writing this post, news covered property website Zoopla (founded in London in 2008) planned IPO. Zoopla was founded in London in 2008 by Alex Chesterman, former LoveFilm founder – which was acquired by Amazon. Chesterman is an experienced entrepreneur and his business model was simple: estate agents advertising in the website. He raised £3.75m of funding from a US firm (Atlas Venture) and from a UK one (Octopus Ventures) and had a simple apprachoach: dominating a growing market (which happened to be the case of real state one in the UK. “I didn’t have a problem convincing the investors as they saw that Zoopla had the potential to make money”, he said. “However, the second round of funding was conditional on proving that we can actually build the functionality to value every UK home. It was a Herculean task, but we managed to nail it.”
As a hub, London is proud of what it has achieved. Not only because the tech/info sector—including tech, information, professional, and scientific, industries—has increased by 15 % since, 2009, compared to an increase of only 8 % for the rest of the London economy. It is also proud because of the role of the government in the development and support of this digital economy.
To this extent, Bloomberg’s study conclusions and comparisons to other major tech hubs in the world is worth a read. “It is also important to note the parallels between local government policy in London and New York, and to a lesser extent San Francisco. In London, like New York, the local government undertook a series of low-cost policy catalysts to encourage the growth of the tech/information sector. These include the conscious effort to create a tech community in the city, including the formation of such organizations as Tech City UK along with related promotional and educational activities. These efforts helped created a virtuous circle in which policy helped create a clear guidepost for attracting start-ups to the city, which in turn generated even more excitement, energy, and economic growth. These factors underlying the London tech/info boom complement each other, and in some sense can- not be separated out. But without support from the local government, we might be looking at a story of a city with some good tech companies and some interesting startups—the London of 10 years ago—rather than studying it alongside San Francisco and New York as a leading digital city”.