California dreaming: London's hi-tech aspirations

Boris Johnson at London Technology Week launch

London is blowing its tech trumpet in a big way this week.

Boris Johnson, along with former New York mayor Michael Bloomberg and the venture capitalist Sir Michael Moritz, have just launched London Technology Week - a series of events designed to boost the reputation of the capital as a technology cluster. And if you were to believe some startling research commissioned for the week, London is already hitting it out of the park.

A report by Oxford Economics claims there are 34,000 tech businesses in London now, and in the next decade there will be another 11,000, creating 46,000 new jobs. (The fact that TechCity only released one page of the whole report makes it difficult to assess this claim).

Another report by two academics makes an even more startling claim - that there are now more technology and information workers in London and South East England than in the whole of California. So relax everybody, we've got Silicon Valley on the run.

Well, not quite. Some caution needs to be applied, first of all as to what constitutes a technology business or worker. There is some suspicion that all kinds of marketing and PR jobs are being included, and when you ask for examples of really hi-tech businesses in London they are thin on the ground.

Then when you look for London start-ups that have made it big as independent businesses there is still not much to crow about. The biggest UK success story of recent years has been ARM, the microprocessor designer, but it was born and grew up in Cambridge, not London. Asos and Betfair were the two names bandied about at the Technology Week launch, but both were founded long before the whole TechCity project got underway.

When I put it to Boris Johnson that he as a classical scholar might sense a degree of hubris about the claims, he agrees that this is a danger: "There is no reason for hubris when you consider that… we haven't yet produced the kind of knockout multi-billion pound businesses that we see in Silicon Valley." He muses on why that might be the case - is there a British diffidence about making money, is the venture capital industry not as imaginative as it might be?

There is of course one very imaginative venture capitalist at the event, Sequoia's Sir Michael Moritz. Born in Wales, then a journalist in the US, he spotted the potential of Google and Yahoo at an early stage, and so became one of Silicon Valley's wealthiest venture capitalists.

Tech City Silicon Roundabout - the centre of London's tech ambitions

I've always wondered whether London could prosper without better links between TechCity and local universities, but Sir Michael thinks the answer lies in looking at a wider area: "London is beautifully situated, with Oxford and Cambridge being an astonishingly fertile triangle of scientific, engineering and mathematical knowledge," he says. He feels there are also grounds for optimism in the willingness of young people here to take the risk of starting their own business, something that had not been the case when he left the UK.

Start Quote

I think there's now an opportunity... to do something really crazy - to provide wifi internet access, 3G access for free in the whole country”

End Quote Sebastian Siemiatkowski, CEO of Klarna

It does seem to be the case that some technology companies are being started in Oxford or Cambridge, and then moving to London for higher profile and better access to capital - one example is Swiftkey, which uses machine learning to make typing on a mobile easier. But there is still a funding gap - seed finance is plentiful, but there is a scarcity of cash for firms wanting to move to the next stage.

Sir Michael insists that Silicon Valley investors like him will always find a way to detect talent - "people like us are only an email away" - but so far Sequoia has not backed a London tech firm. Sitting alongside him as we speak, is someone he has backed - Sebastian Siemiatkowski of the Swedish payments firm Klarna.

I'd met Mr Siemiatkowski a few weeks ago and been very impressed with technology that makes it far simpler to pay for goods online. Klarna is already taking on PayPal in its home market in Sweden, has a big presence in Germany, and arrives in the UK next month.

He politely joins in with the acclaim for London - he is after all investing a large amount to bring Klarna here - but then explains why his home town Stockholm has been so successful. He says it is all about public investment in infrastructure dating back to the early 1990s, first giving free PCs to poorer households, then providing fast broadband.

He has this advice for London: "I think there's now an opportunity for some tech hub - wherever that might be - to do something really crazy, which is to provide wifi internet access, 3G access for free in the whole country." The first one to do that, he said, would really drive innovation.

There are certainly reasons to be cheerful about London as a technology superstar, and the mere fact that there is so much hype about what are right now quite slender achievements, is helping to draw successful companies like Sweden's Klarna and Cambridge's Swiftkey to the capital.

But consider this when you hear that London is growing faster than Silicon Valley. Last week, one relatively young San Francisco start-up, Uber, received $1.2bn of new funding - that's about £700m. The British Venture Capital Association tells me that in 2012 - the most recent year for which they have figures - £681m was invested in the whole UK technology sector.

So London's tech scene may be growing fast, but it will need a lot more cash if it is to catch up with California.

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

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  • rate this

    Comment number 27.

    The reason that these companies cluster in London is because that's where the skilled workers are. Nobody who is of working age wants to live in Haltwhistle nor rural Devon, so that is why no companies have located in these areas, which is why London can justify it's higher costs.

    You're welcome to try to start up a company in the sticks, I give it about two months before you're out of business.

  • rate this

    Comment number 26.

    california has been bankrupt for years, the very fact we got a tech center of our own now, by default it puts us ahead of california just because.

  • rate this

    Comment number 25.

    @ 1 Comber

    "Problem with the tech/web industry in the UK is there are too many investment funds setup by Consultants and Accounts from the banking industry and similar who have no idea about entrepreneurial ism or tech"

    Errr no. The US has a much larger private equity market that has allowed tech start-ups to get financing much more easily than in the UK. We should encourage this more in the UK.

  • rate this

    Comment number 24.

    I work in software and technology and it is great for the UK that this sector is creating jobs.

    Although a tenuous link, developments in technology and communications is exactly why projects such as HS2 are such a waste of public money, you're already able to be anywhere in the world in a virtual state. £50bn to further enhance this sector along with science and medicine please.

  • rate this

    Comment number 23.

    22 ex public servant
    Fine,outside of the areas discussed in the article please give latitude and longitude followed by reasons and relevance or reasons for future geographical/business potentialTthanks.

  • rate this

    Comment number 22.

    Again London centric - what about the rest of the country - London is not the be all and end all for this country - get off your backsides and come out and see the rest of us!!

  • rate this

    Comment number 21.


    Your comments are variations around the same depressing theme hampering the British technology scene for decades. If Tommy Flowers had a job selling his idea, what hope has anyone else? Latterly Alan Bond has struggled for decades to get his propulsion system adopted.

    Britain is bulging with talent but managed by a bunch of chinless carpet baggers.

  • rate this

    Comment number 20.

    The innovation we need is to get haematophagous rent seekers off our backs. I know people who started still-profitable science businesses back in the 80s and 90s while living in vans, in squats and on sofas. The lemming-like dash to screw our last few workers for rent has pushed recurring expenses too high to take risks and left nobody with disposable income to spend on local innovators.

  • rate this

    Comment number 19.

    There would be far more risk taking and entrepreneurs if whether they could eat or afford shelter or not did not have to come into question during the innovating. More support for subsistence of those willing to innovate would mean far more ordinary people gave it a go. As it stands if you don't have capital or investors your new business is pretty screwed and you'll be in lots of debt.

  • rate this

    Comment number 18.

    lol at Silicon Roundabout version of Silicon Valley , most of the companies located there are small internet start commerce companies

    For American tech companies, its cheaper for them to be located outside London ...which is actually a good thing for the rest of the country

    Also all lot of these American IT firms in the UK base their residence on small islands outside the EU to save tax

  • rate this

    Comment number 17.

    13 EastAnglian
    Must admit that's never been my definition or understanding of socialism.
    It's simply that those above a certain level contribute more to society in financial terms.
    But this is balanced with the need to continue growing as a company/individual but still rewarding ALL staff as this growth occurs proportionately the same as the board.
    Same pain same gain in ALL areas.

  • rate this

    Comment number 16.


    Leave the forest fires & droughts behind, but watch out for the floods.

  • rate this

    Comment number 15.

    Excellent news. We must make the most of this opportunity. A new UK search engine would be a good start. Search engines are getting very closed these days. Also, better operating systems and ways of doing computing, windows is getting tired. We are short of space, so technology would be an ideal future business for the UK.

  • rate this

    Comment number 14.

    12 Rabbitkiller
    Agreed,3 points.
    1.The number and amount of wealthy tech individuals and venture capital and their attitude to risk and terms they offer.
    2.The attitude of banks towards debt and what they expect in return.
    3.If its harder to access investment at reasonable rates you have the obvious correlation with numbers trying and potential success.
    This is why many fly across the pond

  • rate this

    Comment number 13.

    This is great news -- anything that brings in GDP to the UK is worthwhile. Unless you're a socialist in which case anything which may reward risk taking and creativity with great riches is a bad thing and must be banned

  • rate this

    Comment number 12.

    As a former technology manager for an international company.I've experienced first hand a huge difference in attitudes between the UK and the USA in respect of developing new technology. Given a new idea the UK attitude is pure civil service: 'think of reasons it won't work, what it could cost and how risky it is'. The US attitude is practical: 'let's try it, nothing ventured nothing gained'.

  • rate this

    Comment number 11.

    not a very interesting HYS is it , I suppose there is nothing else happening so we have to look at that odious oaf johnson

  • rate this

    Comment number 10.

    If anyone is interested in high-tech companies, I'd suggest following Marc Andreessen (and his A16Z colleagues) on Twitter (@pmarca). Much more interesting and informative than the drivel the BBC puts out.

    The main reason tech startups exist in London at all is that the US visa situation is difficult. I suspect 99% of them would move to the US in a shot, if they could get a visa. Sad, but true.

  • rate this

    Comment number 9.

    10 Comments in 2 hours, well done BBC you close HYS on people who make valid arguments agaist a war monger (Blair) and those who make valid and acceptable arguments against Islam another war monger religion. BBC representing the 1% like the rich while ignoring the 99%.

  • rate this

    Comment number 8.

    Shouldn't this be in Cambridge?


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