Tech City – The Pros and Cons of Starting Up a Business in Shoreditch
London’s Tech City has in recent years continued to claim the hotspot for the UK’s digital start-ups. The techie, entrepreneurial energy of Shoreditch, Hoxton and Old Street is incredible. It’s no wonder it landed the Silicon Roundabout label, being likened to the US’s Silicon Valley. London is without a doubt the heart of the UK’s digital tech economy.
Back in 2008 a small cluster of tech start-ups appeared in East London. Then, thanks to Rohan Silva, former Policy Advisor to David Cameron, the Tech City UK initiative was born. Launched in 2010, the initiative paved the way for a huge shift in Shoreditch’s fortunes. Growth of the digital industry in Tech City has been nothing short of spectacular; the Tech City of 2008 is a far cry from today’s buzzing digital metropolis.
There’s now talk of start-ups being priced out of the area, but it’s not stopping the most determined entrepreneurs who want a piece of the action. We’ve taken a look at the pros and cons of starting up a new business in the Silicon Roundabout.
The Pros – believe the hype
- Silicon Roundabout is the UK’s biggest tech hub, and is renowned for growing successful start-ups. It remains the top location for new business start-ups in the UK.
- It’s a huge attraction for investors – the Tech Nation Best Practice report states that the Silicon Roundabout employs more than 300,000 people and contributes £35bn to the capital’s economy. Post Brexit research by Tech City UK found that the UK was still attracting heavy-weight investors. Financial Technology (FinTech) is booming in the UK and there’s still a surge in interest by investors. London is the global FinTech capital.
- There’s a huge concentration of the UK’s digital workforce in a relatively small area. Access to a tech-specialist workforce is a definite plus.
- The growth of Tech City hasn’t gone unnoticed by local schools and colleges, who are priming students for the opportunities. London’s digital market has access to a pro-active digital apprenticeship scheme.
- Start-up hubs and co-working offices in the Tech City area are hugely innovative, and continue to attract hungry digital entrepreneurs. It’s a sought after destination for some of the world’s leading innovators.
- Networking and social events, such as Silicon Drinkabout, TechHub Demo Night and Don’t Pitch Me, Bro, are providing meet-ups with a melting pot of talents. They’re great for exchanging ideas and getting the heads up on any start-up pitfalls.
- Transport links and access to the City’s financial centre, as well as greater London, make the Silicon Roundabout an attractive area to do business.
- Shoreditch and Hoxton have seen a growth in cool bars, clubs, markets and restaurants. It’s not just a tech hub, it’s a buzzing social hub too.
The Cons – don’t believe the hype
- Extortionate rents are a continuing problem for start-ups. Some commentators are arguing the Silicon Roundabout is becoming a victim of its own success. The attraction of larger businesses to the area has forced rents up and squeezed available office space. It’s a question of finances for the small business start-up.
- Superfast broadband complaints haven’t gone unnoticed in the City’s digital hub. Fast speed broadband is something a digital start-up expects.
- Tech workers in Britain get paid salaries on average 36% higher for digital roles than the national average. It’s no surprise that Tech Nation’s 2016 review of salaries put London at the top of the list, with average advertised salaries at £58,978 compared to £45,205 in Manchester and £38,069 in Dundee. Salary costs for a growing new digital business in London are comparatively higher than other UK tech clusters.
- Big players, like Google, Amazon and Facebook are attracting talent for bigger salaries than start-ups can offer.
- London’s not the only tech hub. Leeds, Manchester, Birmingham, Southampton, Reading & Bracknell, as well as Bristol & Bath, and Oxford are among the many tech clusters supporting economic growth in the UK. A Tech Nation report refers to data from GrowthIntel, which identifies 58,000 active digital tech businesses within the UK. 75% of these operate outside of London. According to a recent BBC News report, Wales is now the fastest growing digital economy outside of London.
- Tech City UK examined skills demand and sourcing. They found that 1 in 3 digital tech businesses source talent from local universities. Dundee, Ipswich, Sunderland, Glasgow, Belfast, and Bournemouth & Poole all produce disproportionate numbers of computer science graduates.
- Brexit leaves a huge question mark over the recruitment of EU workers. London’s tech hub, along with Reading & Bracknell, and Cambridge were all found to be areas particularly sourcing talent from overseas. London and Oxford are the clusters most likely to work with other EU countries.
- The City of London is a renowned world leader in financial services, which would ordinarily be a pro for pitching up and starting a digital business in Tech City. Fin Tech is after all a strong focus in the city. It’s a hub that attracts investors from all over the world. The hiccough comes from Brexit. It’s an unknown.