Although disparagingly dubbed Silicon Roundabout, East London’s Tech City aims to be Europe’s answer to California’s Silicon Valley. Last week, this hotbed of tech start-ups in and around Old Street received a major boost when Facebook’s European boss, Joanna Shields, announced her intention to leave the social network giant to head up the Tech City Investment Organisation.
“The success of Tech City shows just what can happen when we back some of our most innovative and aspiring companies to grow, helping the UK compete and thrive in the global race,” said Prime Minister David Cameron.
However, many of the UK’s tech upstarts feel that they cannot get the kind of financial backing that their rivals in the US enjoy.
“From the funding side, I’m not convinced that the EU and the UK are the same as the US,” says Elco Jol, business development manager at tech start-up Epicurely. “The US is more accustomed to funding start-ups through different stages of the lifecycle whereas here in the UK it is limited. There are fewer venture capitalists and angel investors around.
“The US funding landscape is more complete, from early stage investment to the angel round and thereafter through private equity. The transition of being a small company to a mature company [is easier] in the financial landscape of the US.”
Epicurely is one of several UK start-ups to have benefited from Telefonica’s Wayra programme – a tech incubator that invests £40,000 into start-ups for a 10 per cent stake in the business. The start-ups are given six months in a workspace with support and mentoring thrown in. Other similar tech incubators in the Tech City area include Seedcap, Springboard and Google’s Campus.
Wayra UK’s academy director, Ashley Stockwell, believes that these tech incubators are helping the UK to catch up with the US, but concedes that there is still a long way to go.
“The whole ecosystem, in terms of how you start your business, where you get your support from, where you base yourself and how you get funding, all of this is improving, but we are still lagging behind the US. They are more advanced, particularly from the financing point of view,” he says.