In 2008 at a Moo.com summer party thrown by charismatic founder Richard Moross, developer Matt Biddulph jokingly tweeted the phrase 'Silicon Roundabout' as a description of East London's small but burgeoning start-up scene.
What started as a moment of mirth turned into a meme. Biddulph created a Google map plotting Silicon Roundabout’s first 15 tech start-ups which led to an unstoppable blizzard of retweets and news stories.
Having emerged from the doldrums of the dotcom crash, technology businesses had once again become cool in the U.K. Tech was no longer a private party for geeks and hipsters, the entire movement was sent into the mainstream.
David Cameron whacked his pro-enterprise stake into the ground. A string of public visits to Silicon Roundabout were followed by a declaration that London's East End would become a "world-leading technology city to rival Silicon Valley” with Old Street’s Silicon Roundabout at its epicentre.
The Tech City project captured the zeitgeist of the moment. Though the emergence of Shoreditch’s tech cluster predates the initiative by a number of decades, by 2009, technology was being trumpeted as the saviour of the UK’s flagging economy and successor to the moribund financial services sector.
According to a study by Boston Consulting Group, the internet economy’s contribution to UK GDP is approaching 8 per cent, higher than that of any other G20 nation. IPOs are on the horizon for the likes of Shazam, Mind Candy and Wonga, while Tech City now boasts the residency of technology giants like Google and Facebook.
As an entrepreneur working in East London’s vibrant technology hub, I’ve experienced first-hand how innovation and productivity can accelerate when a complimentary group of companies work in close proximity, bumping into each other frequently, sharing ideas, clients and experiences.
However, excited as we should be by the gloriously intriguing concept of Tech City, a fundamental shift in the way start-ups are perceived is required for the U.K to stand toe-to-toe with its Californian counterparts.
Winston Churchill famously proclaimed: "Success is the ability to go from one failure to another with no loss of enthusiasm", a perspective at the heart of the Valley’s culture permeating every facet of its relentless innovation.
Instead of the British attitude of "avoid failure at all costs", the engrained attitude of “fail, learn and move on” is a critical component of why Silicon Valley has such a successful start-up culture.
This mind-set seeps through to entrepreneurs and potential investors. Despite its proximity to London’s financial district and a hail of government initiatives designed to incentivise investors, U.K-based entrepreneurs experience a number of challenges when it comes to accessing capital, particularly at seed level.
The UK's early stage investment market lags behind the US dramatically, at $350m compared to $9 billion in the US – over 25 times the size – a stinking dollop of a statistic when considered that America’s GDP is only 6 times larger than Britain’s.
The government’s efforts to bridge this gap are commendable. Improvements to The Enterprise Investment Scheme (EIS) saw funding for early-stage companies increase by more than 30% last year. Incubators and accelerators are springing up around Tech City, complimented by pitching events and crowd-funding sites helping improve information pathways between entrepreneurs and investors.
As a start-up junkie and occasional frequenter of Tech City’s technology events, I don’t share the view held by some that London’s digital revolution isn’t really happening. Critics point to the government’s over-zealous approach to counting Tech City’s start-ups. According to the Guardian, of the 1,340 companies on the Tech City map, only 137 are bona fide tech companies, others include PR agencies, cafes and fashion boutiques.
Though this analysis indicates a degree of embellishment, it’s worth considering that the first map of Tech City drawn in 2008 included just 15 companies.
What these figures do elucidate is a wider and more deep-seated issue; a chronic shortage of skilled tech talent. Tech City is awash with creative entrepreneurs, people like myself with an interest in start-ups but limited technical proficiency. Indeed, eight out of 10 tech firms have reported that a skills shortage is limiting business growth; the growing demand for computer skills has not been matched by a supply of skilled recruits.
The perception of programmers as sun-deprived girlfriend-less basement-dwellers doesn’t help the cause. However, the recent celebritification of famous uber-nerds like Mark Zuckerberg has led to a shift in societal attitudes towards ‘geekiness’.
The shortage is also being addressed via changes to the national curriculum. Children will soon be encouraged to think programmatically from an early age: creating and debugging simple programs, understanding algorithms and using Boolean logic before they leave primary school.
Silicon Valley is the obvious benchmark for Tech City to aspire, but at 140 square miles and with 50 years of history, direct comparisons are not entirely justified.
For the UK to become a truly global technology hub, the government should look beyond the roundabout. London is the only cluster in the UK that enjoys full governmental recognition and support. The justification being that primary buyers of technology services are located in London, and equivalents from other first-tier global cities like New York and Berlin, find Shoreditch wedged as it is between the City and poorer parts of East London a captivating place to visit. It has a dynamic, liminal quality in this sense.
There are however a number of other pioneering technology clusters in the U.K that should be receiving greater attention. Newcastle is a centre for biotechnology start-ups, Bristol is a computer gaming hub and Cambridge’s “Silicon Fen” is the birth-place to some of the U.K’s most innovative and influential technology companies.
Perhaps catchy Silicon-themed nicknames highlight part of the issue. Tech City can definitely learn from the Silicon Valley mind-set. But London is not Silicon Valley, and rather than simply attempt to replicate its quintessential technology culture, London should develop its own mind-set. One that is specific to its own unique geography, history and cultural roots.
New York’s start-up scene for instance has been highly successful in capitalising on the sheer diversity of industry verticals in the city compared to Silicon Valley. Availability of tech jobs and the frequency of VC deals are growing at a much faster rate in New York compared to Silicon Valley.
London can match New York for industrial diversity, and should learn from the Silicon Valley mentality, but to become a truly global technology force, Tech City should work more closely with the U.K’s other technology clusters to build a unique environment and mind-set for technology and innovation to prosper.
image: © Joscelyn Upendran