More grey hairs needed in Tech City
The study, entitled 'A Tale of Tech City', examines the high-technology cluster in the East End of London and looks at the various challenges, and poses several solutions, faced by early-stage companies in the area.
One of the key findings was that there is a significant demand from Tech City-based entrepreneurs for mentoring and business advice to help grow their business, especially in the stages prior to seeking institutional investment. The extensive networks of seasoned entrepreneurs, angel and venture capital investors present in other clusters such as Silicon Valley are, in comparison, lacking in the East End of London.
Others areas of concern are:
Access to finance
- Lack of understanding of the digital sector by financiers;
- And, conversely, a lack of understanding of how to raise finance by businesses.
Access to skilled staff
- Poorly designed university courses mean there are not enough computer scientists;
- Immigration laws make it harder to import skilled team members.
Policy issues
- Whilst the attention from Downing St is generally welcomed, and the role of the Tech City Investment Organisation (TCIO) can be helpful, there is much wariness about the misaligned incentives. Specifically any role of TCIO and the Olympic site. Most involved see these as separate issues and this aspect should be removed from TCIO's objectives.
To help overcome these problems, the report makes a number of recommendations. Highlights include:
Mentoring
- Inner East London's existing professional networks should actively develop mentoring activities and meet-ups for younger firms.
Access to finance
- Angel and venture capital firms should relocate to East London;
- Banks should develop specialist digital economy offerings, covering both day-to-day banking and debt finance, as well as links to legal and accounting services.
Policy issues
- The Government and other public bodies supportive of Tech City should prioritise helping SMEs and entrepreneurs over attracting digital employers and workers.
Commenting on the report, Mark Florman, CEO of the BVCA, said: "This report presents the venture community with both a challenge and an opportunity. There is no longer any dispute that we have the makings of a genuine, world class, technology hub on our doorstep. However as the report makes very clear, to help it fulfil its potential, the investment community will need to become more engaged, sharing our knowledge and experience with entrepreneurs before they would normally come onto our radar. We know how keen our membership are to become involved, so over the coming months the BVCA will be taking an active role in finding the most effective methods of engagement."
Rob Whitehead, Deputy Director of Centre for London, said: "It's harder for entrepreneurs to access the right kind of finance here compared to the US. More can be done to encourage private investors. UK banks, VCs and business angels are missing out on the opportunities domestic firms offer, many of whom are going to the US for funding."
Notes to editor
- The British Private Equity and Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has approximately 520 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers.
- Centre for London is a new politically independent think tank focused on the big policy challenges for London. It is being incubated by the national think tank Demos, but is an independent organisation. Please refer to the author of the report as the think tank Centre for London. This is not a Demos report. View the report here.
