Tech City: Inside London's digital start-up hothouse

How entrepreneurs in a corner of East London are gearing up to compete with Silicon Valley...

...take notice.

"It's doing a lot of good - we see a stream of people from corporations, overseas businesses, government," he said.

An example of the power of branding, by giving East London's digital heartlands a new name, it seems the government has been able to generate interest in, and business for, the area.

An outside view of the Trampery, in London's Tech City

An outside view of the Trampery in London's Tech City, home to Trampoline SystemsPhoto: Jo Best/

The labelling of Tech City has had, according to Trampoline Systems' Armstrong, a "magic effect" - he cited OECD research that found that simply having a government label something a cluster, even if it does nothing else, leads to a significant increase in inward investment.

As ustwo's Erhardt puts it, "It's been really hands-off... they've been cultivating [Tech City] from arm's length."

Beyond the publicity

Aside from a lot of cheerleading - even the Duke and Duchess of Cambridge have promoted the initiative - what else is the goverment doing for businesses in Tech City? It's putting its hands in its pockets to the tune of £2m, with the Technology Strategy Board calling for proposals from SMEs and micro-businesses for innovative R&D projects in and around Silicon Roundabout, which it will fund with a series of £100,000 grants.

It's worth noting that the grants are only available as matched funding - that is, those awarded the money will have to find another backer to put in the same amount before the grant can be claimed - so how much of that will actually end up in the hands of start-ups is unknown.

"We want to draw investment and people into the area, and to encourage networking and collaboration to strengthen the cluster. We are therefore looking for projects that may be too risky for companies to go for alone or that may take them into new areas, and where the majority of the project activities will take place within the Tech City area," the Technology Strategy Board said.

But the growing interest and number of organisations set up in the Tech City area is bringing its own problem to the same start-up community it's seeking to bolster. Thanks to the increasing popularity of the area, rents are rising - potentially putting them beyond the reach of nascent businesses and entrepreneurs without investment.

"Anecdotally, [start-ups that can't afford offices] are jogging between people's homes and cafes. The biggest risk for Shoreditch is ...

About Jo Best

Jo Best has been covering IT for the best part of a decade for publications including, Guardian Government Computing and ZDNet in both London and Sydney.

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