During London Technology Week 2016, the emphasis on London’s ‘Silicon Roundabout’ as the shining light of the UK tech scene once again comes to the fore.
The annual event is a unique opportunity for tech experts from all over the world to flock to the capital, to share ideas and to embrace and compete with some of the latest products and services being born in London. But for many UK small businesses, the promise of a thriving ecosystem in London offering ready access to the best talent in Europe is often masked by the reality that cheap office space and reliable internet speeds are increasingly hard to come by.
With access to more than eight million Londoners and 500 million people in Europe, a London-based business has access to the world’s biggest single market, and celebrated shared spaces like Google Campus, WeWork and Central Working do an excellent job of providing flexible office facilities for start-ups - especially those that have been through a mouth-watering funding round. But when it comes to finding a cost-effective base for a growing business, London can be a mixed bag.
The need for speed
According to Cisco’s 11th annual Visual Networking Index (VNI) published this month, the average fixed broadband speed in the UK will double from 24.7Mbps in 2015, to 51.3Mbps in 2020, roughly on par with the global average. This suggests that the UK is a strong place to run an internet based business – and let’s face it almost all businesses today are ‘internet businesses’ at the very least using online tools in areas like marketing, accounting and recruitment.
However, there’s some evidence that the best location for an SMB may actually be outside London, with the likes of Cambridge boasting ample graduate talent, low crime rate, relatively inexpensive office space and the lure of London an hour’s train trip away. Other areas building momentum include Manchester, which boasts a £46 billion economy, Edinburgh, which is home to large numbers of technology start-ups spurred on by SkyScanner’s relocation to the city, and Newcastle and Bristol, both which have seen the emergence of a number of fast growth startups.
In fact, even businesses outside of a major UK city will have been buoyed by the government’s plan to introduce a Universal Service Obligation (USO) giving everybody the legal right to request a minimum speed of 10Mbps by 2020.
Funding & investment
The Guardian earlier this year reported London as having £2,975,712 investment per 10,000 people. But how does it measure up in its quest to rival Silicon Valley as the mecca for tech-minded SMBs? It’s fair to say much of that status has come from the amount of start-up incubators and venture capital invested in tech businesses in the San Francisco area, reportedly a 15.4 per cent of the world’s share. In 2012, the US dominated the tech VC map of the world, accounting for 68.6 per cent of total global tech VC in an analysis of Thomson Reuters data.
London is beginning to catch up, claiming upwards of a 2.0 per cent share ahead of nearest European rival Paris (1.1 per cent). Alongside numerous UK crowdfunding sites, competitions like VOOM 2016 run by Virgin Media Business offers the chance to pitch to Sir Richard Branson later this month and could be the making of one of these semi-finalists. In total over 158 businesses battled it out in an X-Factor style elimination process that recently broke the Guinness World Record for the longest back-to-back business pitch marathon (28 hours, 51 minutes!).
Collaboration & community
One indisputable benefit that London offers over Silicon Valley is its position as the world’s financial services capital. In 2014, figures showed that the UK fintech industry was worth £20bn, with £342m of investment channelling into the sector during the year. What better opportunity to seize then, than combining this existing abundance of financial services industry skills with the growing tech community? A likely outcome of this would be London adding the words “world’s Fintech capital” to its title over the next decade, so long as both parts are open to collaboration and making the most of this unique opportunity.
Fintech as a sector is inherently collaborative; in order to mitigate risk, increase productivity and bring more stability to the financial system, companies must work together to address challenges and bring about innovation. In fact, the ‘fintech revolution’ is being powered by a wave of disruptive startups including Paypal, Uber, and Kabbage, who are using platforms, apps and services to reshape the financial sector through a sharing economy model. We’re in the early part of a huge generational shift in the world of finance and technology, whether it’s through Blockchain, or by connecting businesses to a new generation of systems and service providers. Combined with the vast array of skillsets and tech communities that London is home to, and the capital has a fighting chance to build itself to a position of global strength.
As an SMB, it’s encouraging to witness that tech developers are already actively working together to reach a common goal, such as making their coding framework open source and available to copy for free via sites like Github. On the surface, this seems like a crazy thing to do, but in reality, allowing more people to use a small piece of the master puzzle you’ve made, means there are more people to test it, ultimately making it more robust, bug-free and reliable for your own customers.
The idea of a ‘community’, online or offline is something that London has a good grounding in. Regular conferences open to business minds past, present and future are a great thing for the economy. Events like London Technology Week are a major positive for running your small business in London.
What you pay for in rent, travel and bespoke coffee, you more than make up for in atmosphere, culture and opportunity, whatever sector your business is in.
Gary Turner, co-founder and UK managing director of Xero
Image source: Shutterstock/IR Stone