London: dominating the UK tech landscape
London was once seen as a late starter in encouraging digital technology enterprises, but has more than made up for any lost time.
A recent report found that one-fifth – nearly 40,000 – of the UK’s technology businesses are based in the inner city alone.
This presents challenges for the rest of the UK, but it shows what a flourishing ecosystem and working environment has been created, and can achieve. Success builds on success, as does opportunity.
There has simply never been a better time to bring a technology firm to the capital from overseas for anyone wanting to grow, or start, a digital business in a highly tax-efficient environment.
And what a place: Confident, dynamic and expanding. There can be few great metropolitan areas now so international in culture and talent, or keen to support young, innovative and ambitious digital enterprises.
In practical terms, it means more potential employees, more sources of funding and more markets. It also means plenty of professional services, from accountants to mentors, to help with it all.
The past five years has seen a city transformed, drawing an educated workforce from a global talent pool as politicians, both local and national, have made supporting digital technology a priority.
The result is a geographical magnet for people who want to be in a world-class centre, with all that means in terms of possibilities and lifestyle.
Large numbers of available engineers, developers and programmers helps to keep wages within a comfort zone for employers, as well as giving them a bigger choice about who they take on.
There are also a full range of tax advantages in terms of incentives for development, patents and entrepreneurs.
In addition, the country will soon have one of the lowest rates of corporation tax in the EU as the Government delivers on its stated determination to maintain Britain’s competitive edge.
The costs of employment are also lower than in many other developed nations, which can be an important factor for smaller firms and start-ups. For example, whereas the typical Finnish employee expects 34 days holiday a year, the UK equivalent is 28 days.
But perhaps above all other advantages, the UK is a springboard into both the rest of the EU and to the United States.
It is also a launchpad into the important FinTech market, with so many global financial institutions based in the City of London. Many are, literally, next door to Silicon Roundabout, the cluster of technology firms based around Old Street roundabout. The burgeoning FinTech market has also seen a further hub of technology companies being created around Canary Wharf, the other home of banking and finance in London, which is seeing new startup companies looking to disrupt what has historically been a slow moving sector.
It is perhaps not surprising, given such proximity, that London has now become the FinTech capital of the world, employing more people in the sector than any other city anywhere, including New York.
Follow the money
The concentration of skills has also brought a concentration of money. Capital markets are open, sophisticated and have considerable experience investing in digital technology.
In the first three months of 2015 technology companies in London secured $682 million in venture finance funding.
The amount of venture capital in London is more than 10 times higher than it was when Tech City, which was set up by the Government to encourage technology enterprises in London, was launched just five years ago.
This support from venture capital shows just how far London has travelled in a short time. The city is now a global force in digital technology and intends staying that way.
Michael O’Brien is Head of Technology and International at Kreston Reeves. He specialises in helping companies from overseas to grow in the UK and expand further into other markets.