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Business Management

Three Years On, London's Tech City Shows Progress

I should say upfront that I was a disbeliever when (can it really be three years ago?) David Cameron announced the details of Tech City, his government’s attempt at fostering a digital hub in East London.

At an event this morning, Minister for Culture, Communications and Creative Industries Ed Vaizey described Tech City as “a fantastic success story”.

“I remember when Tech City started, people wondered if it was right for government to be trying to ‘pick a winner’ but it has really paid dividends,” he said. “It acts as a beacon, a great signal that the UK is open for investment in tech.”

I think that’s about right. Tech City hasn’t been cheap and has struck some false chords at times but it’s a brand and it may not be entirely coincidental that London has risen to be an emerging power among technology startups at the same time as politicians have greeted tech giants with palms, ovations and sweet deals. Putting an ROI on the plan would be difficult but there is clearly a buzz over the local tech scene that is attracting money and people.

Of course you might ask which came first, the chicken or the egg. After all, London’s financial services hub, world-class cultural attractions, (relatively) stable economy, business-friendly time zone and cosmopolitan melting pot always stood it in good stead to attract smart people who want to build companies of all kinds.

But Tech City is a name and there are lots of people coming here that might have gone elsewhere, to California perhaps, or Berlin or New York or Paris. London could do with a big-hit IPO to illuminate Vaizey’s beacon but that might well come sooner rather than later as companies such as Mind Candy approach their stock market debuts.

Paul Maritz, CEO of Pivotal, a startup that has grown out of EMC and VMware, is one of those investing, with a £100m, 10-year commitment announced today. Maritz, formerly of Microsoft* and Intel, said that business technology companies need to base themselves where there is talent and opportunity.

“We need to be where young people are, and where enterprise companies are, because they can be the beneficiaries of all this. So we’re putting our money where our mouths are. San Francisco, New York and Toronto [where Pivotal has facilities] are three north American cities that fit that description.”

Asked about the differences between London and Silicon Valley, Maritz said:

“I think there are more similarities than there are differences, which is one of the reasons we’re here. London has the same attributes of being a place where young people want to live. They’re voting with their feet. The startup community isn't ’s big but it is coming [and] London is different to Silicon Valley, as opposed to New York, in that there’s a huge financial services [sector] here.”

Of course, London is not the UK and the UK is not London. But even here the government’s Vaizey had a decent answer, suggesting that lessons from Tech City will feed into other emerging clusters around the country.

Three years on, Tech City remains a work in progress but progress there has been and London is carving a sizeable niche.

 

*Maritz was asked about rumours that he could be in the frame to be Microsoft’s next CEO but effectively ruled himself out of the race. “I’m happy to say I took my hat out of that ring a long time ago,” he said. “I’m 58 years old.” Asked to comment on what Microsoft should do, he declined to comment, saying, “It’s easy to be a back-seat driver and all these jobs are very hard.”

 

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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