Relocation: Ecosystems Giving London a Run For it’s Money

Tech City in London is home to a broad mix of technology, digital and creative companies.

From the original Silicon Roundabout an entrepreneurial cluster has grown up around Shoreditch and Old Street in East London, extending to reach the Olympic Park in Stratford. It offers opportunities for innovative businesses of all sizes, from start-ups to multinationals, from UK, Europe and beyond.

With over 1,300 tech start-ups, London is a hub for start-ups that is a close rival anything that Tel Aviv, New York, Singapore, Silicon Valley can produce comparable, despite being 4.5 times smaller by size.

Forty-four per cent more tech start-up jobs are being advertised currently than at the same time last year, with 4,753 vacancies currently on offer across the UK according to Tech Crunch, the IT industry watcher. According to Silicon Milkroundabout/Adzuna data, the most sought after workers for UK tech start-ups are (unsurprisingly) developers, with a third (31 per cent) of the advertised roles being for coders.

Some UK Cities have a tendency to favour specific sectors, either for historic reason or thanks to Government initiatives. There are a number of factors which may influence whether you choose to locate your business in London or so look at what is on offer around the whole of the UK if you have that flexibility.

London

London is home to a cosmopolitan mix of people, around 10 million now live in London. House prices reflect its popularity and price per square foot has risen to £4,500 – astronomical by any stretch of the imagination. London remains outside the Euro and has been less affected by the Eurozone crisis as a result while, at the same time, retaining its standing as a global financial centre.

Many large Cities outside of London have been affected by the credit crunch, combined with the loss of many traditional industries – ship-building and manufacturing being particularly hard hit -all across the UK, including financial services, whole swathes of middle management have lost their jobs. Immigrants have entered the UK to take up seasonal employment or low paid service industry jobs.

Certain cities outside London are experiencing success, notably those with leading Universities and Science Parks (such as Oxford, Cambridge, Edinburgh, Manchester and Newcastle – the top 5 locations for start-ups outside of London). Many further North are struggling economically and may be unattractive places to set up anything larger than a modest small business.

Critics of the HS2 high speed rail scheme point out that it could drain skilled workers out of the regions. This is something worth planning for, as (if it goes ahead) it could change the dynamic of the regional towns’ workforces.

Although he grew up in the UK, Ami Shpiro, founder of the Innovation Warehouse and now based in London, originally trained in computer science and spent 5.5 years in the Israeli military; when he left, he got the Rights to commmercialise a platform for logistics optimisation for the military; the ensuing company, Click Software, was floated at the end of the 1990s and now has a valuation of between $250M – $300M; he found he preferred to get into lending money rather than investing and decided to get it all under one roof and Innovation Warehouse was born. The company is an institutionalisation – rather than being run virtually – it’s all under one roof. Shprio looks to invest £75K – £750K typically and is looking for companies that have already got some kind of traction. He focuses on the “investment readiness” process – getting the ticks in the right boxes for investors. He believes London transcends Tech City as a brand and there are tremendous resources; in addition, there is a huge financial centre on the doorstep, yet it hasn’t properly started to subscribe to what’s going on in Tech City, being risk adverse. See interview on www.techbritain.com

According to www.techbritain.com, there are 52 clusters around Britain, of which the top 5 are London, Manchester, Cambridge, Edinburgh and Newcastle with London having by far the biggest concentration, with over 7,000 entities (includes investors, events, accelerators and other organisations associated with or supporting start-ups).

Manchester

Nationally, the creative industries are worth £36 billion every year, employing 1.5 million people and accounting for £1 in every £10 of the UK’s exports. Manchester is a hub for the creative industries, with 330,000 employees of 31,000 companies making it “the second largest creative and digital cluster in Europe”. With investment ploughing into Salford’s Media City, it’s a great place to set up a creative business.

Software is the biggest single sector according to TechBritain, with 16% of the 273 entities registered being in this sector, followed by e-commerce, advertising and Web.

London remains a significant player in the creative sector, however, as does Bristol. Aardman Animations (famous for Wallace and Gromit and, more recently, the Shaun the Sheep spin-off) and the BBC’s Natural History unit are both based in the city, as well as a huge range of much smaller businesses.

Cambridge

Cambridge is home to a leading, world-famous, University and has a thriving MBA course as well as a respected Science Park. It is expensive to live in Cambridge but transport links are good and Stanstead Airport and London are within easy reach; as such it is an attractive location for tech start-ups with a lot of support from Government, the Council who cultivate close links with the private sector.

Cambridge has a 4.69% growth in start-ups, with 180 entities registered, according to TechBritian, with the biggest single sector being software (20% of companies registered), followed by biotech (20%) and hardware (9%). Recently “The Guardian” highlighted just what a complex industrial eco-system exists at Cambridge, based on the ‘knowledge’ economy and what a thriving hub of creativity it is, now being dubbed Silicon Fen, with a nod to Silicon Valley.

Edinburgh

Edinburgh, the capital of Scotland, has 153 entities registered with a growth of 4% in start-ups, tailing off in recent years, and is known as Silicon Glen. Its top performers are software, web and consulting according to TechBritain.

Newcastle

Newcastle has a growth rate of 8.5% (source: TechBritain) with 35 Start-ups and a resurgence in 2013 on this front (whereas others have declined) and is attracting a lot of attention as a vibrant, arts based City, too. Top growth areas are software (16%), web and enterprise. The City has good transport links to London and attracts a lot of Government grants, where the public sector is anxious to plug the “North/South” divide.

How to choose

There’s more to consider than just the geographic location of the business. Choosing a building or business premises that suits your enterprise is as essential as deciding which town it should be in.

There’s another consideration – the future. Your business will probably need to adapt several times, so the choices you make when you decide where to set up shop or relocate can shape the entire lifespan of the company.

If you’re ready to start your own enterprise, or if you’re planning to purchase a business, it’s important to seek advice and plan your location and long-term strategy before committing then it will become one less thing to worry about, and that means you can focus more on developing your MVP, getting out to customers to test, iterating, pivoting if required and scaling through to growth external investment with a viable product.

What are your thoughts?

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  • Kelly Sheldrick

    I was told a few years ago that Manchester and the north of England was the place to be in terms of business operations and headquarters – that most businesses were relocating up there due to the lower costs. I’m not sure how true that is, but they did give me a number of examples (TV and radio headquarters etc).