Companybook boss Chris Rhodes on why tech start-ups should look beyond East London to set up shop
Chris Rhodes, CEO of Companybook, explains why the right location can make all the difference to a tech start-up – and why he’s chosen Mayfair for his business.
You have a good idea. You know how to profitably take your technology to market. But do you know where you should be located? Tech City, Silicon Fen, Silicon Glen, or somewhere different? It’s not easy to choose, but depending on your goals and business plan, there are reasons to choose or discard all.
The first step in the decision process is to look at all the options. The first port of call for many is London’s Tech City. Renowned worldwide as the UKs flagship technology cluster, it enjoys full recognition and support from the UK government through the Tech City Investment Organisation (TCIO) a quango founded by the Department for UK Trade and Investment, encouraging growth and development within the area. It’s host to some well known start-ups, but also giants such as Google, Cisco and Bloomberg.
However, while the argument goes that it’s a hub of innovation that attracts and supports technology firms, there is a danger that a new business can get lost in the mix. There are reportedly 1,340 companies in the area and enough hot air to launch a zeppelin. In fact, according to some recent analysis from the Guardian, the hype might come from the fact that 700 of the firms there are PR or design agencies and just 10% (137) are actually tech companies. A further 482 are a mix of charities, pubs, cafes and shops.
There are other drawbacks too. According to a recent survey of firms orbiting the Silicon Roundabout, 77% said a lack of skilled workers is restricting their growth, while 44% said this was the “biggest challenge they face”. Perhaps more interestingly, a significant minority (a third) say lack of access to capital is hampering their business.
Although the TCIO is designed to help new start-ups, it is also holding some businesses back by driving rental prices through the roof. Start-ups without masses of capital are beginning to struggle to get into Tech City and those who are already in, are finding it hard to pay high cost of rent and are starting to look elsewhere.
This begs the question, should a tech start-up look for a cheaper, less frenetic location where costs are lower, but the innovation remains? Perhaps The Silicon Fen in Cambridge (aka the Cambridge Cluster) is the answer? This hub of small high-tech firms now has over 1,500 businesses that count as part of the fold, creating more that 53,000 jobs in Cambridge, meaning the area is bursting with entrepreneurship and innovation.
Cambridge has been at the heart of some of the most important tech names to come from the UK, including Arm and Autonomy, drawing on the brains of Cambridge University and converting them into successful businesses.
There is also the allure of Silicon Glen – not a robot going by the name of Glen, but another hub of innovative entrepreneurship in Scotland between Dundee, Inverclyde and Edinburgh. It has been an alternative hotbed of high-tech investment since the 1940s and 50s saw Ferranti and IBM locate there. However, in more recent times, firms that were once stalwarts of the region such as Motorola, Sun and NCR, have shut up shop.
Furthermore, despite the attraction of the Fen and the Glen, one major fact remains: neither are in London. And this is an important factor. According to the Office for National Statistics, London’s economy grew by 12.4% between 2007 and 2011 – nearly twice the rate of the second place region, the South West, at 6.8%. The East of England, containing the Cambridge Cluster, grew by less than 3% in the same period and the whole of Scotland grew at 6%. More than any other factor, this underlines the point that to grow, find customers, get capital and flourish, nowhere is better than London.
In addition, London has the highest proportion of skilled workers in the UK with 20.6% having a master’s degree or doctorate. There are also 270 nationalities working in London, driving the city forward and creating opportunities for international expansion.
Perhaps then, to stand the best chance of success, tech start-ups need to look for a London location, close to everything they need for success – talent, funding, customers – that has more to offer than a glossy image and a cool East London postcode. But where?
To answer that we should keep two key points in mind. Firstly, where can a business looking for quick growth be close to funding (a major issue for some in Tech City), and secondly, where have other fast-growing UK technology behemoths set up shop in the capital with success. While there may be other competitors, one area does stand out: Mayfair.
Mayfair is still home to the London offices of the UK’s most successful technology company, Autonomy. Other than Newcastle-based Sage, Autonomy is the only software (not hardware) firm to get into the FTSE, and despite its rocky ride since selling to HP, it remains a leading light in meaning-based computing.
Mayfair is also home to plenty of investors looking to put their money into firms with a strong offering and the expertise to make it a success. A quick online search will very quickly put you in touch with tens of investors, angels and fund managers all clinging to this top London location.
That’s exactly why as CEO of Companybook I am taking the firm from its roots in Oslo to new HQ in Mayfair. The area is affording us the financial backing we need to take the success of the company to the next level – and importantly, we’ll be close enough to these investors to keep them on-side throughout our journey.
In summary, Tech City seems to be more worried about its Hackney hipsters appeal than the success of the innovation it craves. Meanwhile, the Silicon Fen has failed to bring any big software to fruition before selling out to US firms and is held back by the lack of growth so endemic across the UK. And while Silicon Glen is a great name with a strong history, it lacks the investment opportunities offered by London. It might not be right for everyone, but many a tech start-up could do a lot worse than making it in Mayfair.
Chris Rhodes is CEO of Companybook, which helps individuals and businesses to become more successful by bringing together business news, up-to-date company information and relevant social media conversations in one easy-to-use online service.
You need to read:
Sophie Hobson: Tech killed many businesses. So don’t overlook its new sea change
Meet Piers Linney, the new Dragon with plans to build a £500m business
Julie Meyer: Big corporates should invest in “digital enablers”
Leave a Comment