London’s Silicon Roundabout attracted more than 15,000 new companies last year in a move that makes it the most popular start-up destination in the UK, according to figures released this week.
Accountancy group UHY Hacker Young found that the EC1V postcode around Old Street and on the fringe of the City of London borough witnessed 15,720 new businesses open their doors in the year leading up to March 31st, easily outstripping any other area in the UK.
The cluster of start-ups in the area that has become known as Tech City has been boosted by government efforts to promote it as a centre for new technology businesses, the research claims. Indeed, the government is spending £50m of taxpayer’s money on redeveloping the area around Old Street in an effort to make it a more attractive location to open an office.
UHY Hacker Young partner Colin Jones said: “Clusters of expertise can be highly effective in driving new business creation. The area around Old Street has been an emerging business destination for some time thanks to relatively cheap rents, but since the internet and app industries started to colonise the area, new business creation has really taken off.”
Critics of Tech City have said the hype is misguided and claimed that the number of true technology firms pales in comparison to the number of companies that merely have a website or an interest in tech.
Property consultants Shoreditch Office Space specialise in bringing companies into the Silicon Roundabout area. The firm told Techworld that over the past year it has seen an increasing diversity in the type of companies moving to Tech City.
Luke Francis, head of partnerships at Shoreditch Office Space told Techworld: “There has undoubtedly been a significant surge in the number of start-ups developing mobile phone apps moving into the area – we have recently set up CityMapper with a new office in Tech City. Mixcloud, Songkick, and My Jam have also followed suit and taken workspace in EC1. Other clients, such as Shuttle, have come into the area to capitalise on the skill cluster and improve online presence.”
However, Francis added that there has also been reluctance from large tech companies to move to the area, with LinkedIn, King.com and Yahoo all favouring West End locations that already have well-established advertising and public affairs networks.
Canary Wharf and Bishopsgate in the City of London saw 4,900 new ventures, less than a third of the total for Silicon Roundabout.
Other leading areas for new business in the capital included Borough and Bermondsey (SE1), where 5,190 start-ups launched in the last year, predominantly specialising in the creative industries, finance and professional services.
According to the research, the area’s proximity to the City, combined with lower rents and major regeneration projects such as the Shard, have all been helped in the area’s revival as a business location.
St. James’s (SW1Y) attracted 1,830 new firms last year and is already considered to be a popular spot for financial companies, particularly those in private equity and wealth management.
Warrington (12th), Brighton (16th) and Cheshire (19th) were the only three areas in the top 20 located outside London.
There are still concerns that a large number of start-ups are only growing to a certain size in the UK before moving to the US to scale on more attractive financial markets that don’t require companies to list up as much of their company.
Joanna Shields, CEO of the Tech City Investment Organisation – a body set up by the UK government to support the growth of the area – said last month: “One of the things that was missing in terms of growing businesses here was companies got to a certain scale, they started growing, and then they crossed the pond because they wanted to list on NASDAQ.
“We launched something called the High Growth Segment with the LSE and we believe it’s between AIM and the main market but it’s tailored specifically to tech companies.”