Nowhere is tech innovation more visible than in the so called “Silicon Roundabout” area of east London on the fringes of financial centre the City. But new clusters of start-ups are emerging in other corners of the UK’s capital city, as the digital sector spurs job creation and business growth.
A new business map of the UK has revealed that London has the highest start-up growth rate. About 20% of London businesses show annual employment growth of at least 20%.
This is according to the Growth Dashboard produced by the Enterprise Research Centre, a group of five university business schools including Warwick, Imperial College, Birmingham and Strathclyde, which is part funded by the UK government’s Department for Business and four banks.
“More and more entrepreneurs have the confidence to take the plunge,” says Mark Hart, professor of entrepreneurship at Aston Business School and deputy director of ERC.
As London Technology Week gets underway, research commissioned by London & Partners reveals the number of companies in the city’s tech sector has grown by 46% over the past five years, employing 200,000 people. There are 40,000 digital businesses in London and that figure could surpass 50,000 within a decade.
Ismail Ahmed, CEO of money transfer start-up WorldRemit and a London Business School MBA, says: “There is an abundance of world-class talent in the city, and the convenient time zone which enables communication with Asia and the Americas in same working day, is an attractive factor.”
Ismail launched WorldRemit out of LBS’ Entrepreneurship Summer School. The start-up has since raised $100 million in funding from Technology Crossover Ventures, the Silicon Valley venture capital group which was an early investor in Facebook and Netflix, valuing it at about $500 million.
Research from consultancy EY found that London is leading tech investment in Europe, with 1,000 investment projects over nine years – nearly three times as many as its closest rival, Paris. “Over the last decade more international tech investment projects have come to London than Paris, Dublin, Madrid, Amsterdam and Munich combined,” says Gordon Innes, London & Partners chief executive.
Mark Gregory, UK chief economist at EY, says: “In the eyes of international investors, London is a truly world-class magnet for technology investment.
“Fostering innovation, and the capital’s growing reputation for R&D investment, appears to reflect the electrifying impact of the fast-growing east London Tech City.”
Figures from investment bank GP Bullhound show that in the past year, seven “unicorns” – ventures valued at or above $1 billion dollars – have been produced in London.
Manish Madhvani, GP Bullhound managing partner, says. “The UK has raced ahead as the undisputed home of unicorns in Europe, with London producing the vast majority of Britain’s billion dollar tech companies.” He adds that growth is accelerating because London has an environment that can sustain large funding rounds.
TransferWise, the London based fintech venture co-founded by an INSEAD MBA, raised $58 million from Andreessen Horowitz, the Bay Area venture capital group that has backed Airbnb and Twitter.
“The city’s status as both a tech and financial hub means we’ve been able to grow the company from just my co-founder and I to a company of 250 employees, processing over £3 billion worth of customers’ money in four years,” says Taavet Hinrikus, the MBA co-founder of TransferWise.
Ambarish Mitra, CEO and co-founder of Blippar, an augmented reality app maker that recently raised $45 million in funding, says London is the perfect location for global growth.
The London School of Economics graduate says: “The city has been a springboard for Blippar to open offices in six countries and grow threefold year-on-year since we started.”
Meanwhile, newer hubs are emerging in the UK capital. Entrepreneurs are finding homes at the Olympic Park in the east, Imperial College’s new campus at White City to the west, Soho in central London, and Croydon Tech City to the south.
“Where else would you rather be?” asks Vaibhav Negi, president of Cass Business School’s Entrepreneurship Society in London. “The networking opportunities here are unmatched.”
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