DECEMBER
5, 2013, 7:00 PM
Behind
London Tech Scene, a Government Push
LONDON
– Over the last three years, a lot has changed in East London, the center of
London’s technology community.
Rundown
cafes have morphed into high-priced pubs, multilingual 20-somethings fill
trendy coffee houses, and the city’s tech scene continues to
grow stronger.
“Before,
there was nothing here,” said Chris Morton, a former venture capitalist who
co-founded Lyst, a fashion start-up, here in 2010. “It was tough. There was no
help and the community was still pretty small.”
In
part, London’s growth into a European tech hub has been because of support from
the British government.
Central
to that initiative is the Tech City Investment Organization, a state-backed
body in charge of promoting London’s tech community, which will celebrate its
third anniversary on Friday.
Part
industry cheerleader, part government development agency, the body – named
after the tech city moniker was adopted by some local politicians – has
championed the city’s tech hub to global investors. It also has helped to
streamline visa issues for entrepreneurs and reduce other administrative
hurdles that confront fast-growing start-ups.
“We
have really shined a spotlight on the region,” said Joanna Shields, an American
former senior executive at both Google and Facebook, who became head of the
government agency late last year. “Having built businesses myself, I can
represent the needs of start-ups.”
As
London’s tech community has grown, the influx of developers, engineers and
other talent also has attracted more attention from a number of large American
tech giants.
Google,
which already had offices in the British capital, opened a co-working space in
the center of East London’s vibrant tech scene over a year ago. It has more
than 22,000 registered members and holds weekly events for the local community
like hackathons to networking soirees with investors.
“Now,
you don’t need to be lucky to find advice on how to start a business,” said
Kathryn Parsons, co-founder of Decoded, a start-up that offers coding courses
to non-tech savvy corporate executives. “All the tools are now here.”
Despite
its growth – and continuing government support – the London tech scene is still
dwarfed by Silicon Valley, and the British capital competes with other European
technology centers like Stockholm and Tel Aviv for both venture capital and
talented engineers.
Britain,
for example, still receives less venture capital per capita than Sweden or
Israel, according to the data provider Dow Jones Venture Source.
And
some investors question whether London-based tech companies will achieve the
multibillion dollar exits from selling to a large tech company or from initial
public offerings, which are needed to secure its place within the global
technology industry.
“A $1
billion valuation has become the benchmark for success,” said Mark Tluszcz,
managing partner at the European venture capital firm Mangrove Capital
Partners.
As
London’s tech community prepares for 2014, many founders, investors and local
policymakers are hoping that the new year will bring a series of high-profile
exits for the city’s start-ups.
King,
the online gaming firm behind the Candy Crush franchise has a large office in
London, even though its roots are in Sweden. Yet the company is planning an
initial public offering in New York.
Ms.
Shields of the Tech City Investment Organization is trying to increase interest
from London’s large financial industry in the hope of persuading more tech
firms to list in the British capital instead of New York.
“The
battle for London isn’t against Menlo Park or Berlin, but against New York,”
said Greg Marsh, a co-founder of the boutique short-term housing website,
Onefinestay. “Now, at least half a dozen companies are thinking about exits.”
