Government's Tech City start-up strategy criticised

By Dave Lee
Technology reporter, BBC News

image captionThere is concern rents are rising to prohibitive levels in and around London's Old Street area

The government's strategy to support technology start-up companies in London has been criticised in a report due to be published next week.

Think tank Centre for London said entrepreneurs in the Tech City area had been left "frustrated" by some policies that had been put in place.

Plans to encourage businesses to move to the Olympic Park area were said to be "potentially counterproductive".

In response, Tech City said the report had "misconceptions" about their work.

"We are not trying to create or even follow a formula," a spokesman for the Tech City Investment Organisation (TCIO) said in a statement on Friday.

"The cluster of tech, digital and creative companies was growing organically in east London and will continue to do so, regardless of government intervention.

"Our role is to provide help and support where we can to help ensure long-term, sustainable growth — whether that's through policy initiatives from central government or through business support delivered by TCIO.

"We focus on helping businesses set up in the area that's right for them - whether that's in Shoreditch, Greenwich or Stratford."

Technology hub

The Tech City initiative was launched in 2010 as a way to help grow London's emerging technology start-up industry.

Due to rental rates lower than other areas of the capital, the Old Street area of east London gained a reputation as being the hub of this activity, earning the nickname "Silicon Roundabout".

TCIO, headed by British entrepreneur Eric Van Der Kleij, aims to help this area grow by encouraging investment in its fledgling companies. It has a yearly budget of £1.7m.

The organisation also seeks to extend the hub to locations in and around the Olympic Park - a policy with which the think tank report expressed concern.

"There [are] fears that by concentrating its energy on the Olympic Park sites, which many see as the main reason for the Government's continued attention, [TCIO] risks diminishing the energy of what is still a young cluster," the report read.

While tech companies in the area broadly support government policies to support them, the report said "most of them knew little of their detailed nature".

It also said entreprenuers in the area perhaps lacked the business know how to carry out the TCIO's ultimate aim of creating "the next Facebook".

"Although there were many success stories, we found surprisingly little appetite for developing firms into global players," the report said.

"For more world-beating firms to emerge, more of them will need help and support from experienced managers adept at expanding businesses," the report suggested.

'Wider mix'

Bryce Keane, who is part of a team which organises a weekly Silicon Drinkabout networking event for local entrepreneurs, said the Tech City initiative was regarded as a key part of the community's future.

"I firmly believe Tech City has an important role to play in that wider mix," he told the BBC.

"What I think is often forgotten is that right now we have a government that wants to listen, wants to enact change and - most importantly of all - is raising the profile of the area internationally in a way that few single stakeholders can, and that's an important thing."

Other concerns raised by the report included:

  • Skills shortage - there is an "undersupply of skilled developers and specialist staff in the UK", the report said, with entreprenuers blaming poor education as well as visa restrictions.
  • Connectivity - around a third of those interviewed in the report said poor connectivity, such as high-speed internet availability, was a business constraint. Mr Van Der Kleij described this as a priority for the TCIO in a recent debate.
  • Mentoring - despite "strong demand" for advice on business matters, "many companies had trouble accessing this advice in the neighbourhood".
  • Rising costs - increased rental prices meant start-ups were at risk of being "pushed out".

The full report will be made public on Monday following an event at Old Street's Google Campus building.

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