There is a huge amount of scepticism around the concept of London's Tech City. In conversations with fellow journalists over the past few weeks, it has emerged that many people regard London's “Silicon Roundabout” as a phony attempt by the coalition government to align itself with a booming part of the UK economy, in the hope of some reflected glory.

Others have pointed out that technology communities in other parts of the UK have been established for much longer, and have been far more productive than the nascent cluster of digital startups in East London. The words, “There's nothing there,” have rung in my ears more than once.

Call me naïve, but I simply do not agree. It's so very British to dismiss an idea before it's even had time to get off the ground.

Speaking at the launch of Google Campus - which is now the largest purpose-built space for startups in Europe - Chancellor George Osborne said the number of technology firms in East London has risen from 200 to 700 since the Tech City initiative was first launched in 2010. The list includes companies like,, Mind Candy, Huddle, Yammer and TweetDeck, as well as a wide range of startups offering enterprise software, financial services and media creation.

Admittedly, not all of the 700 companies are pure technology companies - there are some digital marketing firms and design agencies too - but to say there is nothing worth seeing in Tech City is absurd. You only have to go for a coffee at Benugo on City Road, or pop along to one of the many Dragon's Den-style meetups in Shoreditch to get a sense of the activity going on in this area.

The point is that a cluster is not built in a day. You can't expect earth-shattering innovations within the first couple of years. Startups need support, investment and mentorship, and larger companies are understandably wary of being the first to jump on the bandwagon.

But the very existence of a technology cluster is a powerful thing in itself. Innovation is rarely driven by an entrepreneur or startup acting in isolation, but through collaboration with other companies within a cluster, and by using support facilities provided by the cluster.

“What is it about a cluster that's different from several hundred individual companies?” asked Nick Appleyard, Head of Digital at the Technology Strategy Board (TSB), over a recent cocktail at McQueen. “It's things like, where do people drink? Where do their children go to school? Having the transport links; having good communications infrastructure.

“A cluster is greater than the sum of its parts,” he added.

Last year, the TSB made its first direct intervention in a cluster with the launch of the Tech City Launchpad initiative, providing support for startups in the form of £100,000 grants. The TSB does not usually specify where it wants projects to take place, but in this case, there was a very obvious technology cluster forming in East London, according to Appleyard, and the TSB decided to heat the bonfire.

Now the TSB is looking around the country at other clusters, considering where similar investments might be made. However, the organisation will continue to have an active involvement in Tech City, where it has come to know several of the startup companies, and has built up a picture of how they complement each other and feed into the wider chain.

“There's something about critical mass,” he said. “If you have a concentration like this, which gives everybody greater opportunity, we'll concentrate our attention here as well. Not exclusively, but it will be a hotspot of our attention.”

Many of my colleagues point to Cambridge as the centre of technological innovation in the UK, and bemoan the decision not to invest in the cluster there. However, Appleyard makes the point that Cambridge has the University, the Science Park, and a number of big companies with established presence in the area - it is already flourishing.

“The Tech City cluster in London is at a different point in the journey,” he said. “Our feeling was that we could make more of a difference investing here than in Cambridge, where they're doing great. They don't need us.”

Appleyard's underlying message is that it is not enough to dump a whole load of companies into one place and hope they gel together. Creating a successful cluster means creating a community where people want to work and relax, and bring their families.

For all intents and purposes, Tech City seems to have got it right. It is attracting enterprising people, with complementary ideas, to one of the most vibrant areas of London, and putting them in close proximity with a number of organisations that are willing to provide support and investment.

Perhaps, in a few years time, we will be able to view the initiative with a little less cynicism.