At London Tech Week this summer, as hype around artificial intelligence soared, Prime Minister Rishi Sunak offered his take. It was a time of huge opportunity, he said. “But at a moment like this, when the tectonic plates of technology are shifting not just in AI but in quantum, synthetic biology, semiconductors and much more, we cannot rest satisfied with where we stand.” Now was the time to act. “And act quickly,” he emphasised, “if we want not only to retain our position as one of the world's tech capitals but to go even further and make this the best country in the world to start, grow and invest in tech businesses.”
Indeed, London remains the number-one tech city outside of the US, based on analysis by Dealroom using a combination of factors including funding, patents and billion-dollar-plus exits. It is also home to a thriving and supportive start-up and scale-up community. And while the past few years have been tough for the economy, right now the SME scene in particular seems to be enjoying renewed energy.
Consider recent trends in venture capital funding. “VC money may be harder to come by for big, late-stage rounds,” says Roland Emmans, Head of Technology Sector and Growth Lending at HSBC UK. “But earlier stage funding is bouncing back.” According to the innovation policy advisory and research firm Startup Genome, London tech companies raised $19.8 billion in VC funding last year, double that of any other European city, and the fourth-largest amount of any city in the world. Investors, too, are making positive noises. High-profile Silicon Valley VC Andreessen Horowitz has announced plans to open its first office outside the US in London, while European VC Earlybird opened a new office in London earlier this year.
Emmans explains what has lured them: “London's got everything you need for a thriving scale-up ecosystem, and it’s on steroids. It's got good education, it's got strong IP, it's got serial entrepreneurs, it’s got funding, and it's got deep and historic proof of concept.” Indeed, according to business growth agency London and Partners, the city has produced 101 unicorn companies (those with a pre-listing valuation of £1bn plus), which is more than any other in Europe. What’s more, says Wilfrid Obeng, co-founder of London-based audio advertising tech company AudioMob, it has a powerful X-factor. “London will always have charm—it's just one of those places,” he says. “I one hundred percent see that on an international stage: when I say, ‘Our headquarters are in London’, you can see the clients’ ears perk up. It’s got a status.”
Nevertheless, as Sunak implied, London is no longer the only game in town. Its tech ecosystem emerged notably early, but since then rival cities such as Amsterdam and Paris have been playing catch up. So, what do entrepreneurs think it will take for London to retain its crown?
Tim Sadler, co-founder of Shoreditch-based cloud email security company Tessian, believes that fundamentally “the UK needs to make it as easy and desirable as possible for highly talented entrepreneurs and tech talent to live and build here”. That could mean bolstering its Seed Enterprise Investment Scheme, say, or R&D tax credits. The scope of the latter was recently extended to cover mathematics-based work, and to incorporate the costs of datasets and cloud computing. Obeng believes that more should be done to support emerging tech, in particular. “I feel there needs to be more of a focus on nascent technologies, where you're giving them a chance and saying, ‘You know what, it's not fully developed, but we're going to give a grant to this to see where it goes.’”
To Marcia Kilgore, founder of London-based e-commerce “buyer’s club” Beauty Pie, a new focus on immigration will be especially important now the UK has left the EU. “The companies that are going to win are the ones that have the talent,” she says. “STEM training to grow that new base of talent is going to be key, but immigration policies that support tech talent imports are essential. The UK can’t expect a talent pool in-training to compete at the level of India, Ukraine, Silicon Valley, even Austin, Texas. ‘Grow your own’ is not going to be an immediate solution.”
The founders to which WIRED Consulting spoke also highlighted something less tangible, but no less consequential: a need to nudge the local culture and ethos in directions that would improve the status quo. We could do more to make a failed business feel more like a battle scar than a mark of shame, they said. We could do more as a country to beat our chests about London’s scale-up scene and the companies it comprises. And, a number of them argued, we could do more to make working in the office, rather than at home, an attractive prospect. That’s not only about keeping entrepreneurial networks alive, but also about corporate effectiveness. “The UK, for as long as I can remember, has led the globe in the quest for work-life balance,” says Kilgore. “And while that balance is ultimately important, having people WFH, or work from ‘wherever’, can result in truly measurable productivity loss if it isn’t strategically managed.”
As European governments invest heavily in their own ecosystems—France’s President Macron just announced a €500 million investment package in AI—the world will be watching London’s next moves. “I think this is a very unique moment for London,” says Sadler. “Can we really hold on to the lead that we have? Personally, I think we'll find that the next decade is even more promising and prosperous. But we’ve got to continue to innovate, and we’ve got to be as hungry as ever.”
This article was originally published by WIRED UK
