Why London Is Closing the Gap on Silicon Valley
Why is London's tech scene thriving?
Silicon Valley and technology are two concepts that go hand-in-hand. It’s been this way for many years and will continue to be this way for the foreseeable future.
But, that’s not to say that other cities around the world aren’t attempting to emulate the world-renowned tech hub on a smaller, yet growing scale.
One of these cities is London, which over the past few years has seen unprecedented growth in every conceivable relevant metric, from the number of new startups, money raised, exits and big tech corporate activity. According to Tech Nation’s 2018 report, the tech scene, especially in the capital, is expanding over two-and-a-half times faster than the rest of the U.K. economy. The sector is worth nearly £184 billion to the U.K. economy, up from £170 billion in 2016.
Some may ask why, given the current climate in the United Kingdom is not exactly steady, driven by political uncertainty and Brexit.
So, what is going on? Why is London’s tech scene thriving?
Historically, London is known for creativity in the arts and science; however, in the last 20 to 30 years, it has become more renowned through innovation and invention.
Culturally, London has been more conservative when it comes to entrepreneurship and making money. We don’t allow for failure as easily as the U.S. To be successful in tech, you will have many failures before you win. The U.S. is more forgiving of people who take a risk and have a go.
The explosion in the financial and professional services industry since the Big Bang arguably stifled entrepreneurialism as the risks were seen as too high and job security was prized above all else.
But in the last 10 years, Britain has rediscovered its entrepreneurial zeal due to a variety of factors, not least due to the global recession, post-Lehman’s world, which threw job security out of the window and the saw the influx of skilled migrants move into big cities like London.
Just last year, over £800 million was invested in fintech startups based in London, which is evidence that things are changing. The fintech scene in London is leading the revolution within the financial sector, which is now seeing companies take an innovative approach to how banks and other financial companies look at their age-old model.
Look at Monzo for example -- the challenger bank now has more than a million customers and recently hit "unicorn" status, despite only launching in 2015. The online-only bank has enjoyed rapid user growth as customers look to move away from the traditional major players for a service which is far more accessible.
The capital has plenty of financial muscle and investment is available in abundance, according to London & Partners, which said: “Venture capital investment into Britain’s technology sector has reached a record high with London-based companies securing around 75 percent of the $2.2 billion raised by U.K. firms since the beginning of this year.”
London also has 47 universities, giving companies access to talent right on their doorstep, as well as being home to thousands of co-working spaces perfect and affordable for startups and offering networking opportunities like nowhere else.
From a business perspective, you can’t go wrong when working in a city where English is the main language and the time zone is favorable for every part of the world.
London gives startups such as ThriveMap, a company L Marks has invested in and TruBe, a place to build a foundation, where they can plan the next step of their company’s progression.
Take ThriveMap, a recruitment software tool that rates the potential relationship between job candidates and potential employers. It recently secured U.S. giant Dolby as a client -- which earned it a £130,000 investment and saw them take steps into growth across the pond.
TruBe is another prime example. It is a London-based health and fitness app that offers an on-demand approach, much like Uber, to one-to-one sessions. The company started off just offering physical therapy sessions before growing rapidly after diversifying its offerings to include massage, meditation and yoga. A factor to this growth is being based in London, where it has had ample opportunities for investment and a huge pool of potential customers.
These two startups used London as a home to build, and through networking and the investment available here are now able to take their product and services global.
London is still some way off matching Silicon Valley but it would be fair to say we’re now considered second as a world-leading tech hub. Shenzen, China; New York; Taipei, Taiwan and Seoul, South Korea are considered serious players within the sphere but in terms of progression over the last few years, London tops the lot.
To me, it’s clear why startups make the decision to move to London because the potential opportunities presented to them are endless. There’s a real aura and energy about the startup scene here. It’s younger, cooler and wants to continue proving itself on the world’s stage. The enthusiasm and buzz around London are electric and there seem to be no signs of that slowing down.
Entrepreneur Leadership Network Writer