tag:theconversation.com,2011:/us/topics/tech-city-uk-13277/articlesTech City UK – The Conversation2019-03-13T11:10:19Ztag:theconversation.com,2011:article/1121952019-03-13T11:10:19Z2019-03-13T11:10:19ZBrexit may usher in point of no return for UK tech start-up scene<figure><img src="https://images.theconversation.com/files/263366/original/file-20190312-86696-slu82h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Other European cities have been quick to sense opportunities from Brexit.</span> <span class="attribution"><a class="source" href="https://twitter.com/charles_hawley/status/750275297740816384">Charles Hawley/Twitter</a></span></figcaption></figure><p>Sifting through the noise to really understand what impact Brexit and all the uncertainty that it brings is having on the UK’s technology start-up scene, it’s possible to see a picture emerging. It is one that should cause serious concern for anyone with an interest in keeping the UK at the centre of Europe’s technology sector. </p>
<p>In The Sun Also Rises by Ernest Hemingway, the American Bill Gorton says to Mike Campbell, a Scot: “How did you go bankrupt?”</p>
<p>“Two ways,” Mike replies. “Gradually, then suddenly”. </p>
<p>This seems very appropriate, given that there are a number of factors that, combined, could now usher in the beginning of a collapse of the thriving ecosystem of high-tech start-ups which has been one of the few rays of hope in a moribund UK economy over the past ten years. What happens in the days, weeks and months to come will determine whether that collapse accelerates.</p>
<h2>1. End of free movement</h2>
<p>It is estimated that approximately <a href="https://www.zdnet.com/article/the-brexit-dilemma-will-londons-start-ups-stay-or-go/">20% of staff in London-based start-ups are from the EU</a>, something the core EU principle of free movement of labour has undoubtedly encouraged. The UK government should want to continue to encourage highly skilled workers to come to the UK, and <a href="https://www.theguardian.com/uk-news/2018/oct/02/uk-immigration-what-is-the-government-proposing">recent pronouncements by ministers confirm this</a>. </p>
<p>However, other government commitments to reduce immigration levels to under 100,000 a year alongside lobbying from other sectors that rely heavily on migrant labour such as agriculture, healthcare and teaching, could see start-ups struggle to find the right skills. There is also a perception issue among young EU workers: that the UK is not such a friendly place to live and work. While <a href="https://www.theguardian.com/politics/2017/aug/27/million-skilled-eu-workers-planning-to-leave-uk-brexit">reports of this are largely anecdotal</a>, perception matters.</p>
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<img alt="" src="https://images.theconversation.com/files/263367/original/file-20190312-86690-13xxd0y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/263367/original/file-20190312-86690-13xxd0y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/263367/original/file-20190312-86690-13xxd0y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/263367/original/file-20190312-86690-13xxd0y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/263367/original/file-20190312-86690-13xxd0y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/263367/original/file-20190312-86690-13xxd0y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/263367/original/file-20190312-86690-13xxd0y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Might ‘Silicon Roundabout’ be, in the future, just a roundabout?</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-england-9-may-2015-view-702239383">Vicky Jirayu/Shutterstock</a></span>
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<h2>2. Decline in early stage funding</h2>
<p>UK investment tracking company Beauhurst monitors venture capital and public funding of start-ups, and records that overall funding <a href="http://www.cityam.com/272725/british-startups-hit-funding-drop-last-year-fintech-bucks">fell from £8.27 billion in 2017 to £7 billion in 2018</a>. This is not necessarily a cause for concern in itself as 2017 had been an exceptional year. But there has also been a <a href="https://www.telegraph.co.uk/technology/2019/02/05/early-stage-funding-uk-startups-drops-15pc-four-year-low/">15% fall in seed stage funding</a>, and this is more worrying. </p>
<p>Seed funding for very early stage companies forms the beginning of the overall investment pipeline, and declines here will create shockwaves that will ripple through the UK innovation landscape for years to come. As Beauhurst acknowledge, a significant and sustained drop in seed funding could be the canary in the coalmine for the longer term health of the UK tech scene.</p>
<h2>3. Fall in EU research funding</h2>
<p>EU funding for academic research at UK universities is an important source of income. Between 2007 and 2013 the EU contributed <a href="https://royalsociety.org/topics-policy/projects/uk-research-and-european-union/role-of-EU-in-funding-UK-research/how-much-funding-does-uk-get-in-comparison-with-other-countries/">€8.8 billion to UK academic research</a> and the current Horizon 2020 programme has awarded <a href="https://www.gov.uk/government/publications/horizon-2020-funding-if-theres-no-brexit-deal/horizon-2020-funding-if-theres-no-brexit-deal--2">almost €5 billion so far</a>. To what extent UK universities are able to access EU finds in the future will depend on what, if any, deal is struck. </p>
<p>A no-deal scenario would certainly have a serious negative impact on a range of important research programmes and projects in the UK. Universities are a vital source of expertise for start-ups, particularly in high-growth areas such as artificial intelligence, data modelling and machine learning. Like seed funders, they form a vital first stage in the pipeline of innovation.</p>
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<h2>4. Incentives from EU cities</h2>
<p>While the overall impact of Brexit on the economy looks likely to be a negative one, it is an opportunity for other EU member states. Financial incentives offered by capitals such as Paris, Berlin, Amsterdam and Lisbon are proving attractive for businesses considering locations to start a company, or for those looking to relocate from London. We have yet to see large numbers of companies move abroad, but a recent survey of 100 early stage London-based start-ups <a href="https://thefintechtimes.com/heres-what-london-startups-are-saying-about-brexit-uncertainty/">said they have considered relocating their operations</a>.</p>
<p>Ultimately, whether they act on these concerns will depend on whether a Brexit deal is reached or not, and how that plays out in the legal realm. In a sector that is heavily dependent on the collection, manipulation and commercialisation of data, much of it personal, the extent to which the UK adheres to the European GDPR data protection regime will be an important factor. A need to conform to EU data protection rules in order to access European markets could make relocating to an EU member state a much more attractive proposition.</p>
<p>So as with most things Brexit there is still a large degree of uncertainty to how high-tech start-ups will react to the changes that are coming. But if Hemingway was right in his view of bankruptcy then a point may occur when the UK suddenly loses its appeal as a European hub for innovation, and all the job and wealth creation that goes with it.</p><img src="https://counter.theconversation.com/content/112195/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Martin De Saulles does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Always delicate balancing act, ensuring London maintains its appeal to tech start-ups will prove more difficult after Brexit.Martin De Saulles, Principal Lecturer, University of BrightonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/547572016-02-16T14:58:52Z2016-02-16T14:58:52ZHow tech firms can drive growth, without making inequality worse<figure><img src="https://images.theconversation.com/files/111655/original/image-20160216-19256-1bjfgp2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">from www.shutterstock.com</span></span></figcaption></figure><p>For many cities, tech hubs have been a key to jump starting economic growth in the wake of the global financial crisis. In an era of uncertainty, tech-sector growth is proving to be a driving force for nations attempting to reach into the “<a href="http://www.theatlantic.com/business/archive/2011/02/how-to-build-the-next-economy/71160/">next economy</a>”. In the UK, for instance, the sector is – optimistically – <a href="http://startups.co.uk/uk-tech-firms-estimated-to-grow-four-times-faster-than-2015-gdp/">predicted to grow</a> four times faster than GDP, while tech job growth <a href="http://www.techcityinsider.net/tech-nation-marks-uk-wide-digital-growth/">is expected to</a> outperform all other occupation categories by 2020.</p>
<p>By traditional measures of a successful economy – jobs and wages – this is a welcome development. But there is <a href="http://martinprosperity.org/media/Segregated%20City.pdf">a growing body of evidence</a> which suggests that the growth of the tech sector in cities is associated with <a href="http://www.citylab.com/work/2015/11/economic-segregation-and-inequality-in-europes-cities/415920/">increased economic segregation</a>. And while it’s true that, in general, large, successful, high-growth cities <a href="https://www.technologyreview.com/s/531726/technology-and-inequality/">tend to have</a> high rates of economic segregation, areas with tech hubs seem to experience this effect more markedly. </p>
<h2>Broadening the benefits</h2>
<p><a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/283892/ep18-knowledge-spillover-knowledge-sources-manufacturing.pdf">Studies have found</a> that the share of tech jobs a city has is positively associated with income inequality: so, the higher the proportion of tech employment in a city, the more unequal it is. In short, pessimistic analyses suggest that a technology-driven economy greatly favours a small group of talented and lucky individuals, while bringing little benefit to others. </p>
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<img alt="" src="https://images.theconversation.com/files/111656/original/image-20160216-19260-1kdooc5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/111656/original/image-20160216-19260-1kdooc5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/111656/original/image-20160216-19260-1kdooc5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/111656/original/image-20160216-19260-1kdooc5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/111656/original/image-20160216-19260-1kdooc5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/111656/original/image-20160216-19260-1kdooc5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/111656/original/image-20160216-19260-1kdooc5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Soaring costs in San Fran.</span>
<span class="attribution"><span class="source">from www.shutterstock.com</span></span>
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<p>This trend is being borne out in international tech hubs. Tech growth in San Francisco’s Bay Area has <a href="http://www.citylab.com/housing/2015/12/why-tech-will-never-leave-the-bay-area/421650/">driven property prices to levels</a> far out of kilter with the average local salary, and is pricing out smaller firms. Meanwhile, in London, tech growth has <a href="http://www.techlondonadvocates.org.uk/wp-content/uploads/2015/04/TLA_REPORT-Apr15_Online.pdf">increased the cost of living</a> in parts of the city. Coupled with a shortage of housing options and office space, this has led to both smaller firms and households being displaced from central areas. </p>
<p>The gentrification of formerly industrial areas has been a particular issue in recent years. The introduction of permitted development rights has placed the need for new homes in direct competition with the demand for business space. But now, <a href="http://www.rtpi.org.uk/media/1697226/Planning%20and%20tech%20final%20-%2016.2.15.pdf">a new report</a> from the Royal Town Planning Institute (RTPI) argues that this need not be the case. </p>
<p>The impact that tech enterprises have on a city is grounded in the choices we make as a society. The question is: as the tech industry grows, how can we increase the opportunities on offer, for the greatest number of people?</p>
<h2>Wider opportunities</h2>
<p>The marked growth of the tech sector and its resources – and the profitability of many tech firms – means that there is more that these businesses can to do address the challenges facing local economies where they are based. Local and national governments have an important role to play in all this. Pursuing a tech growth agenda may well lead to overall gains. But policy makers must combine this agenda with efforts to ensure that these gains are shared, if they are to address longer-term city challenges. </p>
<p>The RTPI report argues that cities experiencing tech sector growth, and the infrastructure challenges that go with it, cannot simply rely on existing planning and tax obligations. Instead, authorities should put together a clear city technology plan, which takes the potential for wider benefits of tech sector growth into account. </p>
<p>Such a plan could clearly lay out the longer-term challenges faced by the city and possible alignments that exist between tech firms’ resources and public policy challenges. Not all tech growth involves new development, and many of the potential benefits are social rather than financial in nature. And measures can be taken to secure these benefits, rather than simply hoping tech growth will naturally spillover to the local economy. </p>
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<img alt="" src="https://images.theconversation.com/files/111659/original/image-20160216-19275-1aiyob6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/111659/original/image-20160216-19275-1aiyob6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=342&fit=crop&dpr=1 600w, https://images.theconversation.com/files/111659/original/image-20160216-19275-1aiyob6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=342&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/111659/original/image-20160216-19275-1aiyob6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=342&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/111659/original/image-20160216-19275-1aiyob6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=430&fit=crop&dpr=1 754w, https://images.theconversation.com/files/111659/original/image-20160216-19275-1aiyob6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=430&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/111659/original/image-20160216-19275-1aiyob6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=430&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Getting glassy.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/uncoolbob/10482108363/sizes/o/">uncoolbob/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
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<p>One obvious solution is to up-skill the local community. One of the biggest problems facing the tech sector is a shortage of coders and software developers. Many tech firms’ city centre locations place them close to relatively deprived communities, so why not make the local community tech literate, in order to deliver the skills tech firms need? For instance, Hackney Community College in London has <a href="http://www.techcityapprenticeships.com/">started an apprenticeship scheme</a> with local tech firms, to both grow the local skills base, and help meet the demands of the sector. </p>
<p>Another option is to collaborate with tech firms in urban regeneration projects. Tech firms and employees <a href="http://www.brookings.edu/about/programs/metro/innovation-districts">display a preference</a> for easily accessible, walkable, multi-use districts. This provides a clear opportunity to reconfigure urban areas. In some cities, previously industrial districts are undergoing physical transformations, alongside economic ones. Well planned regeneration projects will make use of consultations to involve the views of the local community. This is a crucial part of the process, in order to avoid displacing local residents and businesses.</p>
<p>Finally, local governments can employ a team to engage with the sector. In order to attract and harness the growth of the tech sector, it is crucial to get a sense of what these firms want from the city. Dublin’s commissioner for startups and Amsterdam’s chief technology officer are two newly devised roles that provide interesting models in this context.</p>
<p>The tech sector is likely to continue growing well into the future. Yet the benefits are not always shared. But there’s huge potential for mutual economic and social support between a city and its tech sector. This potential should be nurtured into a collaborative relationship, which achieves economic growth that everyone can benefit from.</p><img src="https://counter.theconversation.com/content/54757/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Neil Lee was on the advisory panel for the Royal Town Planning Institute's policy paper on planning and tech. </span></em></p>The tech industry is booming - so how can we make sure that the cities where they’re based share the benefits?Neil Lee, Assistant Professor of Economic Geography, London School of Economics and Political ScienceLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/375402015-02-18T13:25:06Z2015-02-18T13:25:06ZBeyond Silicon Roundabout, the UK is a high-tech start-up nation<figure><img src="https://images.theconversation.com/files/72282/original/image-20150217-19457-8c20li.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There's more to the UK than just this roundabout.</span> <span class="attribution"><span class="source">Stephen McKay</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Whether as “Tech City” or “Silicon Roundabout”, the cluster of digital start-ups centred around Old Street in East London is well known. The extensive network of similar start-up clusters in cities outside the capital, however, has now been revealed by a thorough <a href="http://www.techcityuk.com/technation/">study</a> of the UK’s start-up scene.</p>
<p>Since the economist <a href="http://www.econlib.org/library/Enc/bios/Marshall.html">Alfred Marshall</a> developed the idea of “spillovers” back in 1890, there has been debate over how best to encourage the transfer of knowledge between organisations. The perceived wisdom is that, by co-locating similar organisations in clusters, knowledge will circulate between them and drive further innovation. </p>
<p>Keen to promote economic growth, governments have striven to develop clusters artificially, with planners especially keen to replicate the success of California’s Silicon Valley with the UK’s high-tech industries – hence Silicon Fen (Cambridge), Silicon Glen (Scotland), Silicon Gorge (Bristol), and so on. In this sense, while the findings of last week’s <a href="http://www.techcityuk.com/technation/">TechNation</a> report by Tech City UK are interesting, it isn’t a surprise to see so many clusters emerging elsewhere.</p>
<h2>Strength in numbers</h2>
<p>Media reporting on tech clusters is often London-centric, but the TechNation report shows that this isn’t the full picture: 74% of digital companies are based outside London. Inner London is the third-fastest growing cluster in the UK, but it’s Brighton & Hove that has the highest concentration of digital businesses (3.3 times the national average). South Wales is fast developing as a centre of health tech and data analytics firms, and Bournemouth, a centre of digital advertising and publishing, has quadrupled the number of digital businesses since 2010, while Liverpool, a centre for UK games development, has more than doubled.</p>
<p>Naturally many of the growing centres for digital business are Britain’s other major cities: Manchester’s well-established media and publishing industries have gone digital, boasting the country’s highest per-company turnover. Bristol and Bath are globally significant areas of high-tech engineering with Hewlett Packard, Bristol Robotics Lab and the <a href="http://www.bbsp.co.uk/">Bristol and Bath Science Park</a>. Leeds and Edinburgh are strong in financial tech businesses, Belfast and Dundee are strong in games development. But there are others that might seem unusual, such as the centre for cybersecurity expertise developing in Great Malvern, alongside GCHQ in Cheltenham.</p>
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<a href="https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=464&fit=crop&dpr=1 600w, https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=464&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=464&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=584&fit=crop&dpr=1 754w, https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=584&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/72270/original/image-20150217-19506-4gcivy.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=584&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">It’s not just about London.</span>
<span class="attribution"><span class="source">Tech City UK</span></span>
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<h2>Building success</h2>
<p>Being in a cluster can enable access to infrastructure, knowledge and skills for dynamic but usually resource-constrained small and medium enterprises. </p>
<p>The high costs of research and development have led to renewed interest in what Henry Chesbrough has called <a href="http://www.openinnovation.net/">open innovation</a>, which builds knowledge sharing into the business model of start-up companies. This has allowed tech start-ups with few resources to develop rapidly by drawing upon the expertise of universities and other firms.</p>
<p>Interestingly, as the tools to work remotely have improved, it’s no longer necessary for firms to be permanently located in clusters to benefit from collaborations and hack events. For example, the Open Data Institute maintains several “<a href="http://theodi.org/nodes">nodes</a>” in more remote parts of the country, such as <a href="https://www.publictechnology.net/articles/news/devon-launches-open-data-node">Devon</a>, which allows distant companies to connect to knowledge-sharing facilities in London and elsewhere. Clusters themselves are interlinked, and this provides provincial tech clusters with an advantage: being able to draw upon others’ knowledge to create solutions and products without the high cost of being based in the capital.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=386&fit=crop&dpr=1 600w, https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=386&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=386&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=486&fit=crop&dpr=1 754w, https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=486&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/72387/original/image-20150218-20793-1sgno1o.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=486&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">With over 20 clusters profiled, there’s plenty of activity outside London.</span>
<span class="attribution"><span class="source">Tech City UK</span></span>
</figcaption>
</figure>
<p>Our <a href="http://joeg.oxfordjournals.org/content/12/1/107">own research</a> suggests that even mere affiliation to a cluster or participation in professional communities can be enough to help start-ups by raising their profile and providing legitimacy and reputation in order to help advance firms’ chances in a global market. A strong cluster identity also attracts highly skilled employees, which develops a labour pool with more diverse skills, in turn driving better and faster innovation.</p>
<p>In this sense, geographical location is important. Cosmopolitan urban areas with access to bars, restaurants and education attract talented young workers, drawing new generations of talent into the cluster. Subsequently, tech clusters don’t just appear in London but are supported by the strong cultural draw and educational centres of Sheffield, Greater Manchester, Bristol & Bath and Brighton & Hove.</p>
<h2>What doesn’t work?</h2>
<p>Problems faced by tech clusters are often features of their own success. Competition for office space and employees drives up costs for everyone – and their appeal may attract large, incumbent firms that can out-gun smaller firms in acquiring resources. In this way the young, dynamic start-ups that the clusters were created to assist can find themselves squeezed out – something already occurring in Silicon Roundabout and throughout London. </p>
<p>The rising costs associated with tech clusters in London may see a further increase in the appeal of clusters outside of the capital for Britain’s tech community. What is needed is venture capital, business advice, additional training and support for national and international networks to ensure these clusters can overcome the financial and skill gaps in order to grow. As the TechNation report rightly points out, each cluster has its own unique configuration and this needs to be taken into account; any one-size-fits-all approach is doomed to fail.</p><img src="https://counter.theconversation.com/content/37540/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Whether as “Tech City” or “Silicon Roundabout”, the cluster of digital start-ups centred around Old Street in East London is well known. The extensive network of similar start-up clusters in cities outside…Thomas Wainwright, Associate Professor and Director, Centre for Innovation and Enterprise, University of SouthamptonFranz Huber, Associate Professor, University of SouthamptonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/337022014-11-04T06:07:59Z2014-11-04T06:07:59ZTechNorth will need to offer real benefits to tech start-ups – not just branding<figure><img src="https://images.theconversation.com/files/63438/original/3dx3q8wx-1414947178.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The north needs business angels, not just sculpted ones.</span> <span class="attribution"><a class="source" href="http://commons.wikimedia.org/wiki/File:Fly-Angel.jpg">David Wilson Clarke</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Silicon Valley is a household name; less so its London equivalent <a href="http://www.techcitymap.com/index.html#/">Tech City</a>, although there’s now enough interest in the area for one company to be running <a href="http://www.insider-london.co.uk/silicon-roundabout-tech-city-tour/">guided tours</a>. So what are the chances for <a href="https://www.gov.uk/government/news/deputy-prime-minister-announces-northern-futures-project">TechNorth</a>? It’s the new government initiative that aims to bring together the nascent tech clusters in Liverpool, Manchester, Sheffield, Leeds and Newcastle.</p>
<p>Launching TechNorth seems a wise political move, as it fits the government’s rhetoric of re-balancing Britain’s economy away from London and the South-East. It’s also fitting as <a href="http://www.techcityuk.com/">Tech City UK</a>, the body set up to promote the London scene, has now expanded its remit beyond the capital to cover the whole country.</p>
<p>But will it work? Although there’s £2m a year on the table to support local firms and to attract foreign investment, I’m still unclear what the programme will actually do – and there are major issues that those behind development should bear in mind.</p>
<p>For a start, TechNorth would cover five big cities with more than 150 miles between them and some fairly poor transport links. In the real world, urban tech clusters are very tight-knit – built on a neighbourhood scale, sometimes around a few streets, which allow for lots of face-to-face contact between the thinkers and doers. In Liverpool, for example, a lot of the action is in <a href="http://www.creativetourist.com/liverpool/ropewalks-and-chinatown/">Ropewalks</a> or the <a href="http://www.liverpoolbaltictriangle.co.uk/">Baltic Triangle</a>.</p>
<p>In the case of east London, ministers <a href="http://techcitynews.com/2013/11/14/icity-reveals-plans-for-olympic-park-7500-jobs-promised/">originally planned</a> to connect technology companies in Shoreditch around Old Street Roundabout (“Silicon Roundabout”) with the Olympic Park, a few miles to the east. That hasn’t proved possible, not least because there isn’t (yet) any real connection between the two, and Old Street firms didn’t want to move there.</p>
<p>With that in mind, the chances of creating a single “super cluster” across the Pennines seem slim at best. There are worrying echoes of the <a href="http://squareglasses.wordpress.com/2013/05/13/this-is-not-a-gateway/">Thames Gateway</a> here: a planning concept, not a real place. On the other hand, as has been happening in London, the TechNorth branding might help raise the profile of the start-up scenes in these northern cities.</p>
<p>Who is in TechNorth? The announcement has focused on the five Northern core cities, but cities such as York and Sunderland also have <a href="http://niesr.ac.uk/publications/measuring-uk%E2%80%99s-digital-economy-big-data">a lot of tech firms</a>. It’s not clear why places like this are left out, at least for now.</p>
<p>Firms cluster together because it makes sense. They can tap into new ideas and pools of skilled workers – and share useful facilities and supports, from fast broadband to access to venture capital. But clusters also <a href="http://oxrep.oxfordjournals.org/content/29/2/383.abstract">come with built-in tensions</a>: as more firms arrive, pressure on space increases, rents rise and competition for staff and market share rise with them.</p>
<p>So if the foreign investment the government hopes to attract arrives in the form of big multinationals, these will simply displace smaller, younger, homegrown UK businesses – not a desirable outcome for anyone. Some sort of limit or deliberate focus of what sort of investment is desired is needed. </p>
<p>The investment programmes should be aimed at enriching the rest of the ecosystem, especially the specialist services tech firms need such as finance, lawyers, accountants and workspaces. These are only just starting to appear in London at scale and developing a similar sort ecology is likely to be a priority for other UK cities. Outside the capital, the UK’s venture capital scene <a href="http://www.demos.co.uk/files/ReinventingVentureCapital_-_web.pdf?1279625126">is weak</a>.</p>
<p>Fast internet is starting to become a basic need, at least for firms. So it’s disappointing that the <a href="https://www.connectionvouchers.co.uk/">Superconnected Cities</a> scheme has retreated from rolling out faster systems to everyone, to simply providing vouchers for small businesses. But perhaps the main hurdle that TechNorth faces is that some of the most important levers to success are still held at a national level – it has little cash (the five-city budget is about the same as the original budget for East London alone) and policies such as tax breaks for investors, crowd-funding regulation, immigration and skills are all national government matters. Some policy can be locally maintained – branding, networking, planning and local investment pots – but it’s limited stuff.</p>
<p>Some of these national levers should be devolved: that has started to happen through <a href="https://www.gov.uk/government/policies/giving-more-power-back-to-cities-through-city-deals">City Deals</a>, <a href="https://www.gov.uk/government/collections/local-growth-deals">Local Growth Deals</a> and this week’s Greater Manchester’s <a href="http://www.bbc.co.uk/news/uk-england-manchester-29876939">Metro Mayor agreement</a>.
But we’re still at the start of this process.</p>
<p>I don’t want to be too pessimistic, though. As my co-author Emma Vandore and I found <a href="http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0146.pdf">in our 2012 study</a> of Tech City in East London, the Old Street scene grew quietly for years without politicians really noticing. That could well be the likely trajectory for the various clusters in TechNorth.</p><img src="https://counter.theconversation.com/content/33702/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Max Nathan led the 2012 project 'A Tale of Tech City', published by the Centre for London and funded by BT Plc, the Federation of Small Businesses and the British Venture Capital Association. He is also working on digital economy research funded by Google and by a NESTA grant. </span></em></p>Silicon Valley is a household name; less so its London equivalent Tech City, although there’s now enough interest in the area for one company to be running guided tours. So what are the chances for TechNorth…Max Nathan, Senior Research Fellow, National Institute of Economic and Social ResearchLicensed as Creative Commons – attribution, no derivatives.