Despite the popularity of the moniker, the time may finally have come to transition from Silicon Roundabout to its true name, Tech City East London. A new Transport For London project is destined to remove the eponymous (and distinctly unsightly) roundabout from Old Street, replacing it with a more pleasing pedestrianised square.
It speaks volumes that such projects are seeking to beautify this once rundown area of London. In the early 2000s, many tech entrepreneurs found themselves out of work after the Dotcom bubble burst, and were looking to start afresh. The area around Old Street and Shoreditch fit the bill for two reasons: it was dirt cheap, and it was near a bunch of popular nightclubs.
Having become home to some successful upstart businesses, including the likes of Last.fm, its status was picked up on by David Cameron’s Conservative government. As part of a drive to improve the country’s digital economy, in 2010 Cameron namechecked ‘Silicon Roundabout’ – a moniker popularised by a Financial Times reporter – as a target for investment and government support.
While the area was popular before this, investment after 2010 snowballed. UK venture capital funding almost doubled year on year, and went from less than 9% being focused on London in 2010 to a whopping 67% by 2014. New arrivals found an area boosted by co-working and idea sharing. One co-working space set up in 2010, Nvana, offered desks for £50 a week.
Times have changed, however. The most prominent tenants of Tech City are now Google and Intel, while startups face skyrocketing rent, due in part to a redefinition of business rates. The looming spectre of Brexit also presents its own challenges to the tech industry. So has London peaked as a European tech hub and rival to Silicon Valley? Not quite.
The effects of Brexit on the tech sector are still uncertain. Observers speculate that European talent may be harder to acquire after the negotiations, and differences in legislation may affect the transmission of data to other territories. However, most of the problems at present emanate from the lack of clarity around these talks. A clearing of the air following the UK general election could do wonders, particularly on the issue of EU workers.
There also exists an opportunity to broaden the tech sector’s remit. Until now, hiring EU workers has been broadly preferential to hiring elsewhere, because of a lack of visa constrictions. But reforms after the negotiations could make it easier to hire from areas such as the U.S. and Asia, where most of the world’s top talent resides. The UK school curriculum’s focus on digital skills such as coding will also go some way to closing this STEM skills gap.
And investor confidence remains high. Over the course of 2016 the UK received £6.8bn in digital tech investment, over 50% more than the next best European nation, France. The English capital meanwhile has attracted more investment than Paris, Berlin and Amsterdam combined over the past five years. With a majority of American businesses suggesting that London is still their top European destination, this looks set to continue.
There remains a prestige factor for startups making their home in Tech City. An office here confers respect, and could be the difference when it comes to securing investment and hiring top quality employees.
For those who are able to bed in successfully, this part of London remains an unparalleled resource. The bedrock of a successful startup is its network of support. The community of small tech companies around you, particularly when you are all sharing co-working spaces and small offices, is invaluable in the early stages. Companies sharing ideas, collaborating and pooling resources is one of the reasons London is 30% more productive than the rest of the country.
It’s true that this high-cost, high-risk approach may not be sustainable in the long run. But then the diffusion of smaller startups to other parts of London may not be such a bad thing either. Smaller hubs will inevitably build up in cheaper areas, as has begun to happen just north of Tech City. These ‘satellite cities’ will still be accessible to investors, and companies will still be in range of meet-ups and coffee shop rendezvous.
Ultimately the important thing is being in London, not a particular postcode. The proliferation of tech companies away from one area will break this stigma further, as will more targeted attempts to connect outlying areas to Central London. Indeed the City is already turning its eye to these areas and their young, eco-savvy employees, with plans underway to build a cycling corridor between Tech City and Hyde Park.
While the likes of Berlin and Paris will challenge its monopoly in the wake of Brexit, Europe’s premier destination for VC funding has more staying power than people think. The world’s most outward looking city, combined with a strong consumer market and old-fashioned ingenuity, should stick it out as a tech destination for years to come.