It may have been a world away from Mountain View, but Silicon Roundabout was flying. Between 2009 and 2012, estimates say the number of tech firms in London soared from 50,000 to 88,000. The growth became self-sustaining: accelerators popped up across the locality. Even Google Campus settled there.
Ironically, the success of Silicon Roundabout caused questions to be asked: East London is booming – why should it receive all the help?
So earlier this year, Tech City, which was created to be an intermediary between government and London’s burgeoning tech community, began to shift its stance. It stressed its desire to help the many other tech clusters emerging across the UK.
The ‘city’ in Tech City became a generic term, and the body pledged its commitment to support activity in provincial cities such as Bristol, Manchester, Newcastle, Manchester and Leeds.
Some of the impetus behind this new direction came from Gerard Grech, who took over as Tech City UK chief executive officer from Joanna Shields earlier this year. Hot Topics talked to him…
There seem to be a lot of quangos attached to Tech in the UK. Where does Tech City UK fit?
We simply believe that the UK is the best place to start and grow a digital business, and we aim to shine a light on the sector and accelerate development inside it. To do that, we inform policy makers, put programs together and champion companies in the space.
How do you do this?
Well, you can look at the Exceptional Talent Visa, which we worked with the Home Office to launch. It’s been introduced to bring in talent from outside the EU to help companies find the people they need to grow their businesses. Or you could think about the Future 50 project, which helps later stage companies get to their next stage of growth. And then there’s the IoT Launchpad, which was designed to encourage investment into Internet of Things – an amazing opportunity for the UK.
We’re embedded in the community, really. Between the community and government.
You’ve talked a lot about supporting all UK regions. How do you do this?
The National Tech Cluster Alliance is our vehicle for doing that through best practice sharing, making all cities aware of new opportunities and enabling collaboration. And the IoT Launchpad exemplifies this. To really explore IoT, you need hardware design, network design, big data analytics, UX and UI – and across Cambridge and London you have quite a lot of that stack. Hence, were running a competition across both cities.
Surely clusters form organically out of successful local companies. Some would say you can’t just create and grow them?
I’d challenge that. There are things you can do to accelerate them. You can make councils are as aware as possible about access to space, and to broadband. You can foster local skills and help universities to be conduits to enterprise, championing clusters and bring in investors for example.
So how would that work in practise. How could Tech City improve broadband access for example?
With knowledge transfer with suppliers to alert them to where clusters are. We did a survey with Ofcom to work out what were the issues – particularly in the Shoreditch area. That identified a number of problems and as a result Virgin Media has made quite a commitment to the area.
What’s the Tech City budget?
£2.4m a year.
How do you demonstrate success to ensure that it’s renewed?
Each program has KPIs attached to it. That’s what I’ll be showing, along with evidence of how much we’ve advocated the community. And I’m very keen for them to tell us how we’ve helped. We need to know that we’re putting our resources in the right areas.
Given that tech touches nearly everything now, how do you define your remit?
It’s really software-enabled businesses or hardware. We don’t do something like aerospace, for example. That said, there are some verticals where there’s crossover between traditional industry and digital that the UK is very strong in.
Fintech is an obvious example. We have a critical mass of expertise that’s creating very successful new companies like TransferWise, which is a huge London success. We work with organizations like Innovate Finance to help the sector.
Advertising is another case. This is where cities like London and New York have a real opportunity to lead.
Do you ever experience negativity from the community?
There will always be people who say government could do more. And you have to make a judgement call about where you can add value. Ultimately our programs are all determined by what the community wants.
Does anyone ever want you to do less? For the government to get out of the way?
We’ve never had that, no!
How can you tackle access to skills? Surely it’s the kind of project that doesn’t bear fruit for years?
In one way, yes, you introduce coding in schools and it takes a while for that to develop. There are other ways though. You have to tackle it from many angles. I want to see entrepreneurial life and campus life more integrated, and improve the IP we get from universities. And there are organizations like Makers Academy and General Assemblies, which are helping. They can be expensive, but do help people get jobs.
Do you fear that the work you do can end up attracting overseas companies who hire overseas workers, with no real benefit to the UK?
No, I’ve not seen that. It’s all about getting companies to set up here. and hiring local workers. In fact, I’ve found incoming firms to be pleasantly surprised at how easy it is to connect in with networks and do business and find talent. From next April the UK will have the joint lowest corporation tax in Europe: 20 per cent. It shows how much we believe in business.
And it goes right across the UK with all the specialization we have in the regions: big data and fintech in Leeds, games in Newcastle, digital media in Manchester, robotics in Bristol. Every city has its own DNA.
How much competition is there with other European cities?
Well, there’s no secret source. We can all read about each others ideas and successes, so really we don’t compete that much; I recently hosted the minister of digital affairs for France, for example. What’s pleasing at that the other cities really do recognize London as a leader in tech. We get requests all the time – which is a good thing I think.
Do you have numbers that you use to reflect London’s success? The value of exits? The overall investment?
$1.4bn was raised by VCs based in London in the last six months. That gives some idea of the capital flowing through the city, which makes it conducive to doing business here. And look at fintech. There are 44,000 fintech workers here compared with 11,000 in Silicon Valley.
Are there really unicorns in the UK when compared with California?
Well, JustEat and AO.com are both Future Fifty companies that are valued at £1 billion. That’s pretty significant. But give it time. We’re only a few years in.
Do you think will the really big companies be always be drawn to Silicon Valley?
That’s where I’m very positive. Where there’s big crossover with other sectors, I’m sure we’ll see some really big successes right here.
What’s your opinion of the opportunity in new growth economies?
I do believe London has a great opportunity to be world class in what some people call ‘frugal innovation’. There is so much that can be done for people with just one device, where mobile can really transform people’s lives and be key to a person’s wealth. The UK has a tremendous role to play there given its history, location, language and so on. Just look at what Cambridge has done with Raspberry Pi. You just have to change your mindset.