Tech City's silicon dreams

 
"Silicon roundabout" in east London The Old Street area is home to many creative industries including art and fashion

Can east London really rival Silicon Valley as a place to start technology businesses? Indeed, can it even rival the likes of Cambridge, home to giants like ARM and Autonomy, or Guildford, where some of Britain's best games firms have been born?

That's been the ambition since last November, when David Cameron set out his vision for what's become known as Tech City in a speech at the Tech Hub just off "Silicon Roundabout" - or Old Street as less digital folks know it.

I've been something of a sceptic because, while the area does have a healthy sprinkling of web and new media start-ups, it seems to lack some of the key components of a successful cluster.

There is no world-class university to feed out ideas and ambitious young scientists, no giant anchor company to spin off new firms, no community of angel investors.

But this week I met two men who did a pretty good job of selling the idea that Shoreditch, Stratford and the Olympic Park could soon be the cradle of the Googles and Facebooks of tomorrow.

Eric Van Der Kleij is a serial entrepreneur with a good record of building technology businesses in London, and is now running the Tech City Investment Organisation, appointed by Number 10.

He brought with him to our meeting Bob Schukai, a London-based American technology executive who's acting as an unpaid ambassador for Tech City in the US.

Both were bubbling with enthusiasm about the project, and keen to lay out the evidence that they were already making a difference.

The number of start-ups in the area had more than doubled from 200 to 500, they told me, making Tech City Europe's fastest growing cluster.

Well okay, but rapid growth from a small base does not necessarily mean much - look back at the dotcom bubble and remember all those start-ups claiming 1000% user growth in six months. And gone six months later.

But they were already making a difference to the policy environment.

Number 10, they assured me, was listening to their advice on tax breaks for entrepreneurs and on looser immigration rules for skilled individuals who might start companies here.

Olympic appeal

Yes, but such changes would apply across the UK - what was so special about east London?

Eric explained that there were two things: "One is it's an entirely natural cluster which has grown naturally without help, rather than a greenfield site - the other is the Olympics. We have the opportunity to spend £9bn on the most extraordinary infrastructure."

Stratford train station The new £1.45bn Westfield complex houses more than 300 shops and 70 restaurants

Already, he said, east London was benefiting from better connectivity - BT has upgraded its networks for the area, while Virgin is using it to trial its 1.5 Gb/s broadband service.

I mentioned that colleagues had found that it was just about impossible to make phone calls from the new Stratford Westfield shopping centre and they agreed that better mobile coverage was a priority.

But what was the plan to get business booming? This had four elements, Eric Van Der Kleij assured me, rattling through his plan.

Big corporates like Google and Cisco had committed to invest in the area, with ambitious plans to build research bases employing hundreds of engineers.

Tech City's job will be to make sure those plans are put into action,

Then there will be help for new businesses, including an Entrepreneurs' Festival in November where mentors will help start-ups to refine their business ideas.

Investors were being lured to the area, with showcases of what was on offer.

And finally there was work underway to develop and showcase the talent the area will need, building on an existing set of skills among the coders, designers, artists and new media types already populating the lofts and studios of east London.

I came back to the big question - why east London, not Cambridge, not Newcastle or Manchester?

"My job is to concentrate on London, then make sure it is connected to the rest of the UK," said Eric. "It's a younger cluster - but it has really good assets on its doorstep, customers in the City Of London, the advertising agencies, the post-production industry in Soho."

And Bob Schukai chimed in to underline how much easier it is to market London to American entrepreneurs and investors.

"London is the easiest city to sell around the world," he explained. "If you say pack up your bags and go to Cambridge, think what you're asking your poor lazy American to do - first they've got to get through Heathrow."

The evangelists for Tech City certainly deliver an impressive elevator pitch.

And, from existing businesses like the thriving games firm Moshi Monsters to new ones like Housebites, which promises to reinvent the takeaway, there are already examples of enterprise flowering in the noisy streets around Silicon Roundabout.

But is this already "the Digital Capital of Europe" or "the number one European location for IT and the creative industries", as Tech City's website proclaims?

I think the likes of Cambridge - or Munich, Tallinn and Helsinki - might say come back in 2015 and we'll see about that.

 
Rory Cellan-Jones Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this
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    Comment number 28.

    INMARSAT is based in the area too; perhaps still a start up, but not insignificant.

  • rate this
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    Comment number 27.

    @5. WorcesterMan

    I find your comment quite astounding, you seem to have a dislike of software. There are plenty of companies that have made lots of money out of software - Microsoft, Google, Oracle, SAP, Sage, etc. You might have even heard of one or two of those?

  • rate this
    +2

    Comment number 26.

    No.

  • rate this
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    Comment number 25.

    The south east is sooo expensive. So why not encourage technology companies locate outside of London?

    London is the seat of Government and the home of the Financial Sector. If another city or area could eb encourage to be the Silcon Valley of the UK then why not help reduce the burden on the South East?

  • rate this
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    Comment number 24.

    Why not Southampton or Manchster? Both have airports close by, a good(ish) railway hub and road system.

  • rate this
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    Comment number 23.

    I'd rather base technology on quality of communities. Shoreditch has outstanding design and technology communities, as do Newcastle as do Dundee, as do Edinburgh, as do....

    Let's talk about the work...

  • rate this
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    Comment number 22.

    Transport in London is excellent and there are plenty good universities within a short distance. The internet is however for all, not just people living within a 5 minute walk. Google are in London, as is Microsoft. Why do we in the internet age seem to think everyone needs to work a 10 minute walk from each other? What about the more remote parts of the UK, the Internet is for them as well.

  • rate this
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    Comment number 21.

    The reason that the government has suddenly become interested in the potential of this is purely because there is obviously not enough commercial infrastructure in the UK to raise the sums of money that are required to make the economy viable.
    Like all dreamers they seize upon a "magic bean solution" that could theoretically produce wealth with no real investment, raw materials or planning

  • rate this
    0

    Comment number 20.

    Beware the optimists, they are the ones who believe the London Olympics is paved in Gold. Tech City is being set up for a fall, a really big one. The United Kingdom share a rich history, and diverse culture across its entirely. Technology, ideas, and even people for that matter exist outside of London. Perception trumps reality when government is allowed to establish its own success metrics.

  • rate this
    +1

    Comment number 19.

    Also it takes more than a shiny Westfield to bring true prosperity. I live in Newham in a redeveloped part of docklands and I can't even get virgin cable broadband, nevermind fibre optic.

    Successive govts. have failed to take the computer games industry seriously, leading to a decline in a growing global industry the Uk was once a leader in. I have litte faith they will do better here

  • rate this
    +1

    Comment number 18.

    The problem is that tech startups could base anywhere with a decent internet connection. The only reason I chose to base in the east end was the cheap rent (I work from home) and the fact London is such a vibrant city.

    @Worcester Man:
    Software development absolutely is manufacturing in every sense bar the product being physical

  • rate this
    +1

    Comment number 17.

    Another boost for the TechCity initiative is that after the Games, there will be several hundred highly skilled technical people injected back into the market. This will undoubtedly help answer the tech sector’s calls for UK based talent at least in the short term.

  • rate this
    +3

    Comment number 16.

    It's important to consider the investment in infrastructure in the Olympic Park. The hundreds of kms of fibre optic broadband and enhanced mobile capacity in the area which is used to support venues and the Media Centre for the Games will remain in situ. Tech firms should consider that a move to Stratford means setting up shop over top of some of the most densely connected parts of London.

  • rate this
    +1

    Comment number 15.

    A tremendous amount of government resources & TAXPAYERS' money being expended. Tech City is NOT Silicon Valley. Folly for anyone to say otherwise. The Valley's biggest asset is its "ethos" developed over decades. The timeframe for TechCity does not call for such patience. The plan calls for a global entrepreneur festival this November to take place in London, 6-7 weeks from now. Godspeed.

  • rate this
    +1

    Comment number 14.

    TIme for the government to try THINKING!
    a) Why would you want to set something up to bring more people to an already overcrowded and expensive corner of the country (adding to cogestion and cost)?
    b) Why would you not want to encourage people to work from home (cutting polution and commuting)?
    c) Why would you concentrate something in a small area (creating pockets of work with no homes)?

  • rate this
    +1

    Comment number 13.

    The differences bewtween North CA and E london are manifest
    Correct links to the best universities and innovation campuses
    Proper financing initiatives
    High tax incentives
    Established and experienced investement infrastruture
    Nice place to live
    Lots of room

    Historically UK is always too short term and too shortsighted
    (yes I was there)

    Me thinks more soundbites than megabytes

  • rate this
    0

    Comment number 12.

    Silicon Roundabout has caught attention of Cameron, Osborne & Boris Johnson. As part of PM's launch of a “world-leading technology city to rival Silicon Valley”. Hmmm, I don't think so.
    Response to the Tech City has been mixed & remains so. It's initial pledge (February 2010) to make £200m of equity financing for “businesses with high-growth potential” - lots of dialogue, few bites.

  • rate this
    0

    Comment number 11.

    I don't remember any British start-ups like Google or Facebook; this in spite of hundreds of young digital companies set up in E. London.
    I do remember
    - Dopplr - travel site
    - Last.fm - music site.
    Dopplr was bought by Nokia & Last.fm by CBS. Neither company has really performed extraordinaire.
    Lovefilm - sold to American rival (in this case, Amazon), might fare better.

  • rate this
    0

    Comment number 10.

    Sorry, but a common misconception is that growth in the BRICs nations is a result of cheap labour - costs are rising, but export price flexibility in hardware is maintained, by innovation. Also, the application of IP to software is very limited (only certain types of S//W can be patented - technical SW associated with specific H/W). When others are digging for Gold, the wise make and sell shovels.

  • rate this
    0

    Comment number 9.

    This notion of Tech City is really giving a name to something that has been in that area for about a decade. It has nothing to do with government policies just a combination of a young, tech-savvy, talented workforce and, by London standards, cheap rents.

 

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