Silicon Roundabout start-ups ready for next investment stage
The number of digital businesses in the Tech City area of East London has risen from 200 to 1,300 in just over three years. But for some local start-ups, the real growth is just beginning.
Several of the most promising businesses in Tech City - also known as East London Tech City or Silicon Roundabout - are expected to raise their next round of funding in the next 12 months either by selling themselves, securing private equity investment or floating publicly.
If these deals succeed, they will follow in the long history of successes associated with Tech City which launched in November 2010 with the aim of encouraging tech businesses in this part of the capital.
The successes include the March 2011 sale of Tweetdeck, the social media aggregator, to Twitter for £25m, the £10m investment by Sequoia Capital (its first in the UK) in Songkick, the music service, and the $24m raised from US investors by Huddle, which allows businesses to collaborate online.
Nor is this just a tale of private equity investors and foreign company acquisitions. The global organisations that have invested in the area, which is based around the Old Street and Shoreditch part of London, include Google, Facebook, Intel, Amazon, McKinsey and Cisco. In October 2013 Chinese games firm Rekoo was announced as another newcomer to the area.
What explains Tech City's success? First, the locale is a cluster of young, multi-national talent from across the tech and creative sectors. The district provides a highly social environment that feeds this young workforce's passions for technology, music, food, contemporary art, design, branding and other forms of creativity, as well as an attractive ambience in which to work.
The density of tech-skilled youth in the area - abetted by academic partnerships with five London institutions including Imperial College and UCL - is a major driver of growth and investment. However, the local culture is not one of traditional software development, but positioned at the nexus where digital media is used to power businesses in retail, fashion, branding and design and other areas.
Second, both local and national government have championed the Tech City area, emphasisng the tax breaks and local support services available to start-ups and overseas investors.
These include the creation of the Innovation Warehouse which was assisted by the City of London Corporation to provide investment and incubator services to new ventures and the foundation of the Tech City Investment Organisation (TCIO), a government body which aims to make Tech City the leading digital hub in europe.
Third, the proximity of the area to the City of London - a global capital of finance - provides access to funding on both a formal and informal basis and the area has become famous for its culture of investor-related events where entrepreneurs and financiers can meet and network.
More recently, Tech City has also created formal links to other tech clusters in cities across the UK including Manchester, Birmingham and Bristol.
Joanna Shields, chief executive officer and chairman of the TCIO, has applauded "the momentum and energy that’s spreading not just across London, but across the whole country".
Anthony Foy, chief executive officer of Workshare, even described his company's decision to move its headquarters from San Francisco to Tech City as a "no-brainer".
He has written that "the area in and around Old Street is a beating heart of innovation, made up of collaborative working spaces, an abundance of creative agencies, and bustling coffee shops full of talented individuals working in tech startups.
"Today Tech City offers a real diversity of people from all backgrounds and cultures – if you take Workshare as an example, we have over 30 nationalities.
"This makes for a great melting pot of innovative and creative thinking, and helps to challenge traditional ideas."