Emerging Tech

Silicon dreams: Can tech start-ups survive outside of big cities?

Tech start-ups tend to gravitate towards big cities. So how do you encourage them into a more green and pleasant land?
Liam Gooding is explaining how he decided to set up his co-working space for start-ups and designers, Fruitworks.

"The simple kind of litmus test I did was go into every single coffee shop and count the amount of MacBooks. And if about 30 percent of the tables have got MacBook airs on them you can tell there are quite a lot of designers in this area. And that's the basis on which I signed a ten year lease on a warehouse."

What's perhaps more unusual about Fruitworks is that it's not in the classic start-up hotspot of east London, but in the city of Canterbury some 60 miles south and east of the capital, somewhere better known for tourists visiting its medieval cathedral than techies. Gooding's 2,000 square foot warehouse now sees 50 freelancers coming through the doors on an average month for hot-desking. "A co-working space was dying to happen," said Gooding.

While most of the attention has been focused on Tech City and the wave of new companies within it, it's actually a very small area and many (especially government) are keen to see that start-up sparkle spread a little wider across the country. Silicon Valley after all is an area of roughly a thousand square miles so encouraging innovative companies even a little bit outside of London doesn't sound especially unreasonable, so the argument goes.

Luke Quilter, founder of digital marketing agency Sleeping Giant Media, ever further from the capital in the port town of Folkestone explained there are advantages to being outside London: "What's great is that I can sit at my desk and I can see France I can then walk downstairs and be in London in an hour,"  thanks to the area's high speed rail link, he said.

"There does seem like the start of a community. It is quite a nice selling point - it has that ability to be taken seriously as a credible place to have a business as well as being slightly different, out of town so you get the clearer air," he added.

Being outside of London can be a positive advantage, said Lizzie Hodgson, digital strategist at design agency Deeson, based in Kent: "Our clients like that we are slightly separated from London... we've got that freedom not to be part of that angst that is London as well."

The scale of any tech start-up hub outside of London is limited right now – perhaps no more than 40 tech companies were formed in east Kent (where Canterbury is) in 2011 and many of those have one or two employees. In contrast, London will see more like 600 digital companies formed this year.

The local East Kent council is working on bringing new companies to the area with a range of incentives such as interest-free loans and promoting local success stories – though events like the one at which these companies were speaking – with the aim of kickstarting start-up ecosystem in the most unlikely corners of the mostly rural area – even faded resorts like Margate turned into silicon seasides.

But the first step is likely to be creating a sense of community, which is how Tech City started developing. Co-working spaces and networking events are the building blocks of the entrepreneurial ecosystem.

Charles Armstrong is co-founder of the Trampery, one of the first co-working spaces in Tech City. He believes the success of Tech City demonstrates what might be possible outside of London.

"Back in 2000 nobody thought Shoreditch was going to become a significant hub of technology and creativity: I think what's exciting is that areas that haven't been the focus on attention have some of the greatest opportunities." 

Armstrong said the co-working spaces are the single biggest factor that lead to the vast acceleration in the number of businesses and the growth rates that happened after 2010.

"That area, East London is the global benchmark not just for the density of shared workspaces but for the diversity whatever kind of business culture you want to develop or sector you want to work in, you're going to be able to find spaces."

Similarly Eric van der Kleij, the first CEO of the government's Tech City Investment Organisation and now running the Level 39 incubator in Canary Wharf said: "You do need the density of a cluster and it's difficult if the population isn't as dense as it is say in London so what you absolutely have to do is build the spaces where people can collect together."

He added: "Once you have your incubators, which are the places where the density happens creating these collisions the manufactured serendipity, the space where people can bump into each other over coffee and what that does as opposed to being in your bedroom and trying to start a business is it reduces the time it takes to learn what you need to learn and avoid mistakes."

Still, even if the startup scene outside London is slow to take off, living out of the city might still have some advantages, as Gooding points out.

"I work out of Canterbury three of four days a week and I come up to London for the other days and the irony is that usually the people I'm meeting in London live in London and it took them longer to get to where we are meeting than it took me."

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About

Steve Ranger is the UK editor of TechRepublic, and has been writing about the impact of technology on people, business and culture for more than a decade. Before joining TechRepublic he was the editor of silicon.com.

2 comments
Flawless Cowboy
Flawless Cowboy

Yeah umm, just thinking aloud here, but this manufactured demographic is not likely to fool many reading this "article".


Protip: when the assessment metric used here consists of: "The simple kind of litmus test I did was go into every single coffee shop and count the amount of MacBooks", I leave it as an exercise to the reader to identify the number of observational bias layers involved.


F.C. (hopes the San Francisco term 'reality distortion field' will duly complete its inevitable eastward migration to the trendy London areas some time soon, saving bloggers some embarassment).

Jim Johnson
Jim Johnson

A tech startup outside a large city works great - provided you have three things: access to qualified labor, access to reliable transportation suitable to your product (might be physical or electronic) ,and the company's customer target is national and not just local and often not just regional.