In this series we explore some of the world’s emerging tech hotspots, examine how they came to be, and look at what the future holds for these pinnacles of innovation.
In this installment we look at London and how the tech startups here won government support, and have transformed the area to the East of the city made up of industrial warehouses into a tech hub on the world stage.
The cluster of web businesses that makes up East London’s ‘Tech City’ occupies part of London’s East End between Old Street and the Queen Elizabeth Olympic Park. Initially the hub was developed by independent businesses without government backing. Their arrival and subsequent growth has generated wealth and transformed the space in and around the Old Street Roundabout, which beforehand was a relatively run down part of the capital, just north of the City of London.
Companies were initially attracted to the area by low rents following the 2008/09 recession and an abundance of vacant office space – the area had been a popular location of architectural firms, many of which became casualties of the downturn, further suppressing rental prices. Ironically, when the first wave of tech startups moved in, the area wasn’t served by fibre-optic communications – this stopped a few hundred metres away in the City.
As the East London tech cluster begun to thrive, it gained attention and eventually received support from local and then national government. In 2010, Prime Minister, David Cameron, announced the Government’s ambition to make East London a world-leading technology hub that would one day rival California’s ‘Silicon Valley’. Entrepreneur Eric van der Kleij was appointed by David Cameron to spearhead the initiative. Growth within the area was rapid, in 2010 there were 85 tech startup based in East London’s Tech City, by the end of 2011, this number had grown to around 200 firms.
Between 2010 and 2014, jobs in the UK’s digital tech economy grew 11.2%, almost three times faster than the rest of the UK’s economy. By 2014, it was estimated the annual turnover of the UK’s digital tech industry generated £161bn and 1.56 million jobs. London-based technology companies have collectively raised over $5.2 billion of venture capital funding since 2010.
Learn more about Tech City UK
In addition to government support, East London’s Tech City has gained support from many academic partners who are now involved in projects based in the cluster, these include the City University London, London Metropolitan University, Imperial College London, Loughborough University and Queen Mary University of London. This is similar to Cambridge’s ‘Silicon Fen’, where the academic excellence and innovative might of Cambridge University has spawned another tech hub covered in this series.
From a business prospective, there are many reasons why tech startups have been drawn to East London’s Tech City. As Europe’s financial capital, London is teeming with business angels, crowd-funding schemes, and experienced venture capital mentors. There’s also more European headquarters in London than any other European city – giving technology businesses situated in London unbeatable access to major international contracts and projects. Entrepreneur-friendly visas also make it easy to migrate to London from around the world, encouraging new businesses to set up in the capital. Some of the big names within the area include Google, who acquired a seven-storey building near Old Street Roundabout in 2011, BT, BuzzFeed, HP, Facebook, Microsoft, PayPal and Sky.
In 2015, investment in London’s technology sector was at $2.28 billion, this was 69% higher than the $1.3 billion raised in 2014. With this investment trend set to continue, the future of London’s Tech City continues to burn brightly.
By Roger Mills, Co-founder of Think IT Recruitment.
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