Our Marketing Manager has been to a lot of start-up and tech events in London in the last few months and there is a new excitement in the air. This is about London as a new tech capital, a vision laid out by the Mayor of London, Boris Johnson, in March. There is no doubt that London is one of the world’s leading capital cities. It is already one of the financial capitals and with three of the five top international law firms its credentials are second to none. (Economics Evidence Base, GLA Economics May 2010) But as a leader in technology? This is not something generally known. Let’s look at how this is happening.
Historically London has always been a trading city. First as a maritime port, and then over time as a globally connected trading capital. It offers a unique environment, a blending of industry clusters such as consulting, accounting, media and scientific research; plus a strong higher-education and creative base. This provides talent streams and a close proximity to venture capital. This is just one of the key elements that have propelled the growth of tech companies in London.
There are 382,000 workers in London in the tech/info sector (London Digital City on the Rise) and 88,000 companies set up in the city in the last three years (Tech City News). Maybe it is not known because we don’t yet have a runaway success story like Facebook or a figurehead like Mark Zuckerburg yet. But we do have our own success stories, like Digital Shadows which offers bank security, and Transferwise who allow you to transfer money abroad without added costs. To put it in perspective, the growth of London’s tech/info sector has increased by 15% since 2009, in comparison to the 8% for other industries (London Digital City on the Rise).
Another factor has been the availability of cheap office space in London. The areas around Old Street Roundabout, now known as Silicon Roundabout, Shoreditch and out to East London are now known as Tech City. In 2008 as the bohemian artists moved in so did the tech entrepreneurs. It started with just 15 but by 2012 this had risen to 5,000. There was ample affordable office space and, with good transport links, has continued to grow. Last year a staggering 42% of all property take up in London was by digital businesses. This has been encouraged by local government, who actively encouraged this growth and led to the formation of Tech City UK in 2010.
Local Government, and the Mayor of London, Boris Johnson, have continually encouraged the growth of tech in London. In his London Plan in 2011, Boris Johnson laid out his plans for the capital. One of these aims is to encourage a connected economy, to ensure that there is sufficient ICT connectivity to enable communication and data transfers and to support the development and the extension of high speed symmetrical broadband networks. This has also been helped by the fact BT have their headquarters in London. There have also been other local initiatives, such as boosting the teaching of science and increased focus on ICT in schools. These have obviously not had a direct effect yet, but have helped lay the foundations for the continued growth of London as a tech capital in the future.
So how does London compare to other world cities? In comparison to London’s 382,000 tech/info workers, San Francisco has 397,000 and New York leads the way with 411,000. However London’s tech/info sector has grown by 11.2% since 2009, compared to 7.7% for New York (London Digital City on the Rise). And in fintech, London is already leading the way. London has an estimated 44,000 fintech workers, as of May 2004, ahead of New York’s 43,000 and 11,000 for San Francisco. This pattern also plays out the same in terms of investment.
The next step for London is going to be about continuing this growth. It needs to ensure that the excitement continues beyond the start-up stage to ensure that the market grows and matures. London’s future will then follow the same path.