Tech City: Is the government getting it right?

Computing asks the young technology start-ups of East London's Tech City if David Cameron is giving them the best chance of creating Europe's answer to Silicon Valley

Yesterday Prime Minister David Cameron revisited East London's Tech City to renew his commitment to the vast number of technology start-ups that have populated the area in recent years.

He stated that there are now in the region of 600 firms in the area, up from 200 this time last year, and added that his government would continue to support the initiative.

"One year ago we made a major commitment to helping the tech cluster in East London grow. The successful growth we see today is thanks to the talented, creative entrepreneurs who have decided to set up there," said Cameron.

"As a government, we are determined to continue doing everything we can to help support and accelerate this growth."

Cameron last visited the area, sometimes cynically called ‘Silicon Roundabout', a year ago. Before this week's visit, some companies felt that he was attempting to lay claim to a movement that had nothing to do with his government.

This summer, Chris Downs, co-founder of data analytics start-up Level Business said: "It was happening without the government, and I can't see any material impact that it has made."

However, Mike Butcher, co-founder of Tech Hub, an organisation that provides working space for entrepreneurs and start-ups in the zone, explains that the government was always engaged, just not always with the right people.

"There has been a series of virtually monthly meetings over the last year at Number 10 and in the East End, to bring together large corporates, start-ups, venture capitalists and banks," Butcher says.

"Since they'd never done this before, Number 10 invited a lot of the big tech companies almost exclusively at first, but that's now changing so we've got many more start-ups invited."

Today, most start-ups appear to be extremely positive about the government's involvement.

"We absolutely welcome the government's involvement," says Eileen Burbidge (pictured), co-founder at White Bear Yard, a firm that advises and helps to fund other start-ups.

"The government's focus on Tech City helps with the PR and media coverage for involved companies, which in turn helps with customer acquisition and advertising.

"It also helps materially with recruitment, and attracting much-needed talent that might otherwise only consider the financial or other established corporate sectors for employment."

Tech City: Is the government getting it right?

Computing asks the young technology start-ups of East London's Tech City if David Cameron is giving them the best chance of creating Europe's answer to Silicon Valley

James Dobree, co-founder of Level Business, said that government's financial help has also been appreciated.

"There are tax incentives, like the EMI [Enterprise Management Incentives] scheme, which is fantastic. Most of us hail that as a success."

But there is still a long way to go. If Cameron wants, as he claims, the area to become Europe's answer to Silicon Valley, with the enormous boost to the struggling UK economy that that would provide, then the firms in the zone will need to see more action.

Jeff Lynn is CEO and co-founder of Seedrs, a firm that helps to finance other start-ups, and also chairman of The Coalition for a Digital Economy (COADEC), a body that advocates on behalf of digital start-ups and SMEs for legislative and regulatory issues.

Although he appreciates the PR assistance provided by the government, he wants to see more.

"We want the government to implement the reforms set out in the Hargreaves review on Intellectual Property. We're all very keen to see these wind up on the statute books sooner rather than later."

The Hargreaves review makes recommendations designed to ensure that the UK has an IP framework best suited to supporting innovation and economic growth in the digital age.

Lynn added that funding is also an area in which the government could help start-ups.

"It's not necessarily about opening up Treasury money to be thrown at start-ups. That wasn't effective when the last government did it. But the government could partner with and support private sources of capital in creative and innovative ways."

One controversial government strategy for Tech City has been its enticement of larger enterprises like Google into the area, with some initially fearing that they will hoover up the talent, leaving the start-ups scrapping for the leftovers, or alternatively just pushing up the property rental prices.

However, Burbidge feels that the presence of larger companies actually increases the local talent pool, as more potential employees seek jobs in the area.

"The presence of larger companies helps to legitimise the area, and increases the density of talented people within the zone."

Lynn drew parallels with Silicon Valley.

"In Silicon Valley a coder will cut his teeth working at Google, where he'll get great training and work with other brilliant people. Then he'll jump ship to Facebook which is a little more innovative, then go start his own company."

Butcher added candidly: "In Silicon Valley you don't get told off for joining Google or Facebook or Twitter so why should we do that in London?"

Ultimately it appears that the government is now getting it right in its strategy for the area. The trend continues to grow, and provided Cameron keeps his focus on its development, it could yet prove to justify its ‘Tech City' name, and lose the ‘Silicon Roundabout' jibe.

Burbidge concludes: "I hope the focus does not wane leading up to London 2012 (or thereafter). It would be great to keep the momentum going."