Is London’s Tech City too successful?
At the end of 2010, British PM David Cameron outlined his plans to create one the biggest tech hubs in the world by pledging support to London’s Tech City, or Silicon Roundabout to some.
He announced London’s Tech City at a Downing Street press conference:
“Right now, Silicon Valley is the leading place in the world for high-tech growth and innovation. But there’s no reason why it has to be so predominant. Our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make East London one of the world’s great technology centres.”
Five years on, the UK’s only government-supported technology cluster is home to expanding mega firms such as Vodafone, Google, Facebook, Intel, and McKinsey & Company. Tech City created many prosperous tech startups, expanding from around 15 in 2008, to approximately 5,000 in 2013. Considering the austerity measures following the recession at this time, this growth spurt is remarkable
At the time, startups such as music recommendation service Last.fm, Twitter tool TweetDeck and live music tracking website Songkick, sealed Tech City’s reputation as a prosperous postcode for any aspiring tech startup. In fact, London in general was booming for businesses in 2008, as it wasn’t just companies with new tech or app ideas. The city proved to be a successful hub, with the company later expanding their data centres in Amsterdam, Singapore and recently Los Angeles and Chicago.
By law of economics, the sudden expansion attracted media and governmental praise, resulting in property prices in the area also booming. However, it appears the growth today has hit the brakes. One reason for this, according to The Independent, is the “paradox of success” which is “that the cheap workspace that attracted these companies to the area initially, is now at a premium.”
Options abroad
Berlin has seen a dramatic expansion in tech firms in the past 10 years, and, like Tech City, the growth has had full governmental backing. Berlin’s growth however, is not showing any signs of slowing down, quite the opposite in fact. One of the key reasons for this is the space that is open to developers in Berlin, due to the city having lower levels of population density. While many expats may complain of a housing shortage, this is only a niche of the market, while larger office spaces are available.
The same can be said for Israel’s Tel Aviv, which has also seen an unprecedented rise in its tech industry. Large areas of commerce are done online now, creating a space for tech firms to generate money, which in turn has created a wider market alongside the growth of smartphone ownership.
For aspiring entrepreneurs it would appear that London has outgrown itself, whereas cities like Berlin and Tel Aviv are revealing themselves as the places to be for tech startups.
