London’s Silicon Roundabout Nurtures Clean-​​Tech Startups

July 30, 2012

From the AOL Energy blog.

The traf­fic cir­cle at the inter­sec­tion of Old Street and City Road in East London’s Shored­itch neigh­bor­hood would be just another ugly piece of urban infra­struc­ture if it hadn’t become iden­ti­fied with the city’s boom­ing tech­nol­ogy industry.

The cir­cle – or round­about, as the Brits call the famil­iar road fea­tures – is at the heart of a clus­ter of high-​​tech firms rang­ing from Google and Intel to hun­dreds of star­tups that have opened their doors in the last four years, gen­er­at­ing a cre­ative clus­ter that has invited com­par­isons withCalifornia’s Sil­i­con Val­ley.

Not to be out­done – although with typ­i­cal under­state­ment – the Brits have dubbed their flour­ish­ing tech cen­ter Sil­i­con Round­about after the less-​​than-​​glamorous traf­fic cir­cle at the cen­ter of their district.

The indus­try has grown from an esti­mated 15 firms in 2008 to more than 700 now, helped by a range of incen­tives from a gov­ern­ment that has been eager to cre­ate jobs in an econ­omy that is show­ing lit­tle or no growth.

By the end of 2011, the dis­trict a few miles east of Lon­don land­marks such as the Houses of Par­lia­ment and Buck­ing­ham Palace was home to 774 tech busi­nesses, accord­ing to the Tech City Invest­ment Orga­ni­za­tion, the

gov­ern­ment depart­ment that was set up to pro­mote the indus­try and attract invest­ment to it.
They cover 17 cat­e­gories rang­ing from dig­i­tal adver­tis­ing to data analy­sis and clean-​​tech enter­prises. The biggest clas­si­fi­ca­tion is dig­i­tal mar­ket­ing, com­pris­ing 16 per­cent of the total.

Major tech­nol­ogy firms doing busi­ness in the ‘Round­about’ area include Face­bookCiscoIntel and Voda­fone. In Sep­tem­ber 2011, Google announced plans to lease a seven-​​story build­ing in the dis­trict to help nur­ture local star­tups with activ­i­ties such as train­ing work­shops, speaker series, and prod­uct demonstrations.

Less well-​​known par­tic­i­pants in the dis­trict include Tweet­deck, a social media dash­board appli­ca­tion for the man­age­ment of Face­book and Twit­ter accounts, which was acquired by Twit­ter in 2011, and Skim­bit, which seeks to mon­e­tize social net­work­ing through shopping.

Seek­ing to Build an Eco­nomic Growth Engine

The industry’s eco­nomic poten­tial has not been lost on U.K. Prime Min­is­ter David Cameron who in Novem­ber 2010 announced mea­sures to accel­er­ate devel­op­ment of the indus­try which he said would become one of the world’s lead­ing tech centers.

Gov­ern­ment incen­tives include the Seed Enter­prise Invest­ment Scheme (SEIS), announced in Octo­ber 2011, which enables investors to ben­e­fit from a 50 per­cent tax relief for the first 100,000-pound seed invest­ment. In 2012/​13, invest­ments made via the SEIS will never be liable for cap­i­tal gains tax, mak­ing what the gov­ern­ment says is one of the most gen­er­ous early tax breaks avail­able any­where in the world.

The gov­ern­ment also boosted upfront income tax relief for pri­vate investors from 20% to 30% – bring­ing the scheme in line with the relief avail­able in con­tri­bu­tions into ven­ture cap­i­tal trusts. The amount that any indi­vid­ual can invest through the scheme has dou­bled from 500,000 to 1 mil­lion pounds a year, and the size of the com­pany that can qual­ify for invest­ments has increased.

Tech City is work­ing to attract new busi­nesses by help­ing secure for­eign direct invest­ment, engag­ing with over­seas ven­ture cap­i­talfirms, and rais­ing the inter­na­tional pro­file of the cluster.

The agency said in May that in its first year of oper­a­tion it helped attract 37 new com­pa­nies to the dis­trict, ahead of its tar­get of 26, and built rela­tion­ships with VCs includ­ing Sequoia and Kleiner Perkins.

All the activ­ity has attracted Sil­i­con Val­ley Bank which opened its first UK branch in June this year. Aca­d­e­mic backup for the new indus­try is com­ing from London’s Impe­r­ial and Uni­ver­sity Col­leges, and from the UK’s Lough­bor­ough University.

Among the com­pa­nies now active in the ‘Sil­i­con Round­about’ are those who are devel­op­ing tech­nol­ogy to mon­i­tor energy and envi­ron­men­tal per­for­mance for cus­tomers seek­ing ways of cut­ting both their energy con­sump­tion and their car­bon footprints.

The Silicon Roundabout In Old Street