London gets wired up for growth of tech sector
The technology sector aims to transform the profile of East London over the next few years as the city establishes its own Silicon Valley and reduces its dependence on financial services, creating much-needed opportunities for young people in the process.
A notable appointment is the latest sign of how the government is in backing East London’s tech hub. Joanna Shields aims to take up the position of chief executive at Tech City Investment Organisation (TCIO).“This will absolutely make a difference. She has a brand. Her background and experience will add a lot of value,” says Nasir Zubairi, director of product marketing at The Currency Cloud, which helps companies deliver cross-border payments.
Demand for tech services has seen a major hub develop in and around the Shoreditch area, and the government is on a mission to help Britain compete on the world tech stage. The technology sector accounts for 11 percent of the UK’s GDP and this is set to grow, fuelled by trends such as the rise of e-commerce.
The coalition government set out its stall early on with Prime Minister David Cameron, speaking in Shoreditch, outlining his vision for the growth of the UK’s technology sector.
Couple of years ago, the government set up TCIO to encourage expansion in the area. Recent initiatives that have helped to raise the profile around the East End include the Tech City Apprenticeship programme, which gives 500 unemployed young people the opportunity to work in high-profile digital companies. The initiative was launched last month by Rohan Silva (Senior Policy Adviser to the PM).
‘The Tech City apprenticeship scheme might give hundreds of unemployed young people the chance to work for some of the most exciting digital companies in East London, the fastest growing technology cluster in the world,’ Silva says. Other initiatives to support tech companies seeking funds include the Seed Enterprise Investment Scheme. Tech companies are also gaining from trends such as crowd funding through sites like Kickstarter — a New York-based tech company, which launched its UK platform in October, and has already exceeded the £2 million crowd funding mark.
Google, Intel and Cisco are among the giants to have possibly already invested in tech companies in the East End hub. It is estimated there are more than 3,000 companies operating in the area, employing about 50,000 people.
However the East End had been attracting firms for years before TCIO and other government moves kicked in. About five years ago, the area offered the perfect combination of proximity to the City — especially important for companies serving the financial world — and relatively affordable rents.
“It really started up around the Hoxton area five or six years ago. It was like an underground sort of revolutionary movement.” Zubairi tells The Positive. “There was a need to look for somewhere affordable and alternative. And you wanted to be near companies like yourself to have access to resources and knowledge,” he says.
He says that although he was initially sceptical about TCIO that it is now “doing a really good job” in helping bring investment into the sector. The inhabitants of Tech City — while acknowledging that valuing tech companies is a challenging business for investors – remain optimistic.
For those aspiring to an Initial Public Offering (IPO), floating on the exchange, there may be a friendly environment on the horizon. Government proposals to encourage investment include a planned new route to the UK IPO market for high growth companies, which is likely to feature reformed rules on free float and reporting requirements.
David Brown, co-founder and CEO of data processing company Ve Interactive, is among those welcoming such a move. The company has expanded rapidly and he tells The Positive that the proposals “might become important in a couple of years’ time” when he is more likely to be considering an IPO.
In regards to TCIO, Brown predicts the government being allowed to use it as a “PR machine” and aiming to claim the credit for the success of an industry that has been built more by the entrepreneurs that have shown innovation and willingness to take chances than by the help of government intervention.
Brown also acknowledges the value of TCIO’s work in “getting behind businesses” and providing them with “international validation.”
With Shields at the helm, TCIO is poised to shine the global spotlight on London and its ascending technology marketplace. Shields has publicly called for the city to take its place ‘as the centre of innovation,’ explaining that when it comes to the tech sector, London’s time has come.
How might the east end benefit from the Technology movement?