Tech City is a great idea, shame about the location!

Launched by Prime Minister David Cameron in November 2010, Tech City is tabled to be the British answer to Silicon Valley. With global technology firms including Google, Cisco and Intel all backing the initiative, there is plenty of momentum and talk around the role of East London and the expansion of ‘Silicon Roundabout’ which is slated to become a hive of activity for British technology firms. However, beyond the soundbites and spin, there are clearly some problems.

The Government and its partners behind the ‘Tech City’ drive have provided plenty of backing for the initiative, including £1m in government funding which has been earmarked by the Technology Strategy Board for innovative tech start-ups based in and around Silicon Roundabout.

UKTI has established the Tech City Investment Vehicle to spearhead the initiative and build on the momentum which has already seen some of the most innovative tech-startups in the UK choose Old Street and Shoreditch as their base.

However, recently the long term sustainability of the area in and around Old Street as an affordable technology hub for start-ups has been called into question, creating the impression that start-ups will look further east to the newly created enterprise zone in Newham. There are several issues with the location of Tech City which will hamper its long term viability.

Scalability

The cost of office space is a key factor affecting a start-up’s choice of where to locate their business. The initial (and ongoing) costs need to be considered, as does the potential to expand and grow with the needs of the business. While the TechHub initiative on City Road is ideal for a boot-strapped start-up, it lacks the space to accommodate companies with ten or more employees. The cost of other office space in the area is starting to climb as landlords convert derelict office blocks to residential apartments to secure a better return on investment .

Labour shortfall

Earlier this month Tech City suffered another blow with a news report that flagged a dearth of engineers and tech talent needed to sustain the requirements of all the tech start-ups being established. Britain produces just 20,000 engineers per year, far fewer than needed for the UK to become the global hub of technology and innovation envisioned by many. Recently introduced immigration caps will only exacerbate the situation. Longer term, the shortage needs to be addressed through education and skills development.

Accessibility

These issues are compounded by problems with Tech City’s location. The Northern line is already overcrowded at peak times and it is one of the only effective means of reaching Old Street quickly and easily. While the overground service does connect Hoxton and Shoreditch, trains are infrequent compared to the underground network. These factors combine to make Tech City awkward and arduous to reach from some parts of London, particularly the South East, South West and West London. While I have space at TechHub, I rarely make the journey there from my Croydon home.

Lack of buy-in

Location was clearly a factor which affected Facebook’s decision to snub Tech City in favour of the prestige and convenience of a 36,000 sq foot office in Covent Garden. Facebook will follow in Apple’s footsteps; they have several floors of luxury offices above their flagship Covent Garden store.

There are also rumours that despite backing the Tech City initiative, Google has its eyes firmly set on Kings Cross, not Old Street as the new replacement for their offices in Victoria. Despite the fact that Google, Cisco, Vodafone, Facebook, BT and others have all promised commitment to the Hub, none seem to be interested in being based there themselves.

While the initiative of a Central Hub for Technology in the UK is a good one, it needs to be supported by a series of regional hubs and incubators nationwide, including on the other side of the Thames, which is often overlooked.

Is there a better alternative?

I have recently been tasked with identifying suitable locations for my company to expand its UK operations. While the Tech City area is a contender, one other area in London has cropped up as a particularly viable option. Croydon has a great deal to offer technology start-ups and is emerging as a serious alternative base for us in the UK.

Croydon offers the sustainability and scalability required including excellent transport connections, a huge surplus of office space and plenty of retail and leisure facilities – though admittedly, it suffers from a negative image, particularly after recent unrest. Croydon’s bids for city status have been repeatedly snubbed and just last week attempts to secure Enterprise Zone status were also dealt a blow when it failed to secure backing from the DCLG.

Despite this, redevelopment and a first class transport infrastructure mean Croydon is emerging as an attractive alternative that offers sustainability, affordability and accessibility. Technology firms, particularly those in London and the South East would do well to take advantage.

While I applaud the government initiative to invigorate the British tech scene and drive forward plans for a tech hub in London, I am afraid the age old adage of location, location, location will come back to haunt it within a decade or so, hampering its long term viability and pushing cash-strapped start-ups further and further East, or, with a bit of vision, South of the river, to Croydon.

Saif Bonar is Manager of Freelancer.co.uk, the British division of the world’s largest outsourcing marketplace. He has an MSc in Information and Knowledge Management together with more than 9 years experience of working on outsourcing marketplaces as both a buyer and provider of services.

  • http://twitter.com/mikebutcher Mike Butcher

    Croydon would be a great idea. Assuming any developers actually wanted to live there…

    • http://twitter.com/BizzyRascal Saif Bonar

      Very true, thousands of luxury apartments and about £10bn of regeneration work in the pipeline. For now, saving thousands or millions on office space depending on size should be a good enough pull factor. Also, being 12 minutes from London Bridge and travelling in the opposite direction to the masses in rush hour has its appeal. Don’t need to live here to work here. 

    • Tink Taylor

      dotMailers HQ is based in East Croydon and we have a large & highly skilled development team. The software they have built has allowed us to launch in the US and take on the might of both Silicon Alley and Silicon Valley.

      Many of our team have relocated to the area. Others commute in via London Bridge (15 mins), Victoria (20 mins), Wimbledon (30 mins), Brighton (40 mins) in fact from right across the South East. Personally I am working on overseas expansion and find if very handy that the office is only 25 minutes away from Gatwick.

      There are parts of Croydon that are very nice, however people like to focus on the negatives, its an easy target after all. Most cities and towns have areas that are better than others, Croydon and the surrounding area is no different.

      Its great to see the guys behind Croydon Tech City focusing and doing something positive rather than jumping on the bandwagon and poking fun at stereotypes. They should be highly commended for the traction they are getting, long may it continue and I sincerely hope they wipe the smirks from anyone who mocks them.

  • http://www.facebook.com/rapoport1 Stephen Rapoport

    I agree with this piece, especially the point about rent. We recently looked at relocating Crashpadder from Brixton to Old St but couldn’t afford it. 5 person office in Brixton = £360 per month, same near Old St = £1,200! 

    • http://www.businesscomputingworld.co.uk/ Christian Harris

      I just checked out Crashpadder Stephen. A great service!

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