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SPECIAL report


Kirsty Styles,
senior reporter,
Tech City News

AUTUMN 2015 •

SPECIAL report


We now seem to spend a lot of time
spotting unicorns or hunting dragons,
while also constantly on the search for
those other rare species, the talented
teams who make the fairy tales
But, just like any ecosystem,
real or imagined, it’s really lots of
interconnected parts working together
over time that make the difference
between success and failure.
A tiny shift and that unicorn may
end up looking like a donkey.
It’s five years now since the
ecosystem bubbling along in Old
Street, Tech City, went from half-joke
nickname to government-backed
Of course, this is a mere blip in the
long story of the borough of Hackney,
which this year celebrates the historic
50th anniversary of its joining with
Shoreditch and Stoke Newington.
Would you believe that everyone,
from Hitchcock to Blair, has made the
area we now think of as Tech City their
But Hackney has perhaps changed
more in the past five years than in
most people’s living memory – and
this is really just the beginning.
With six towers planned for
Bishopsgate Goodsyard, a £750m
transformation of Great Eastern
Street, named The Stage as it takes
in the site of Shakespeare’s Curtain
Theatre, along with a 346-room hotel
on the site of Red Market, Shoreditch
ain’t seen nothing yet.
Thirty years ago Hackney had failing
schools, no-go areas and the only
beards were associated with the
Hasidic Jewish community in north
Hackney at Stamford Hill.
Little did the ravers frequenting the
now-defunct Blue Note on Hoxton
Square in the early 90s know how
much their music community would
transform the City, and the entire city,
into what it is today.
“There were a lot of people from
the first bubble sitting around in cafes

AUTUMN 2015 •

pitching,” says co-founder
Martin Stiksel. “And there were lots of
companies that appeared but then very
quickly disappeared again.
“We always knew music and
tech would come together, it’s an
obvious way of living, but the whole
industry went sour after the initial
Working on what we may now call
V.0 of Tech City startups back in 2002, started in one of the team’s
bedrooms in Whitechapel. There were
devs sleeping on sofas, there was no
startup infrastructure to speak of,
meetups didn’t exist, but after three
years and a graduation into a cheap
Whitechapel office, they finally set up
home in Baches Street in Shoreditch.
“There was no Tech City or Silicon
Roundabout and all this kind of
business. It wasn’t to our knowledge
that there was much around there
either,” he says, although the
company’s premises quickly became a
hub for other startup companies.
“It was already the coolest place,
thanks to the music and art scenes that
had grown out of it, but we were just
cheapskates really.”
Four years in, with one million
users, and after a chance meeting at
a digital festival in 2006, Stiksel and
his co-founders managed to bag some
angel funding from now-MIT Media
Lab director Joi Ito and Reid Hoffman,
then in the early years of Linkedin.
Fast forward to 2010 and Last.
fm, having got backing from Index
Ventures before being sold to CBS
in 2009, where it shed its founding
team and got a name-check in David
Cameron’s maiden Tech City speech.
“We only found out later and we
were bewildered that it seemed like
the government was taking credit for
doing diddlysquat. But I guess it was
good news in dire times, light at the
end of the tunnel.”
Stiksel and co are now ploughing
their hard-learned lessons into a new
venture, Lumi, not unlike for
news, based in Smithfields.
Just as the music scene in

Shoreditch “ate itself”, the former CCO doesn’t hold the place his
company used to call home in too-high
“It’s too expensive for funky people
now,” he says. “And where we are
now, it’s easier to speak in a restaurant
without fearing people will hear a
Stiksel also suggests “poverty
focuses you more. We had to
scrutinise really hard on whether we
needed one developer or two. Now it’s:
here’s Amazon Web Services – let’s get
going. Perhaps things now get done
just because they can be done.
“Or maybe they’re just young kids
who are more at ease than we ever
Hot on the heels of these, somewhat
unwilling, Tech City leaders were the
likes of Mimecast, Wonga and Huddle.
Founded back in 2006, online
collaborator Huddle co-habited with
six other VC-backed companies,
including Skimlinks, in what is now
the building site that will become the,
rather ominously named, White Collar
Factory on Old Street roundabout.
“We got kicked out so they could
redevelop the building,” says Alastair
Mitchell, CMO and co-founder
of Huddle. “And office space in
Shoreditch is just too hard to get hold
of for bigger businesses.
“But five years ago, there were
questions around whether the biggest
EU tech hub would be Berlin, Paris or
Helsinki. And it’s clear London is now
the place to go to start your business
in Europe.”
Huddle has had to move out to
Aldgate and is about to upsize, yet
again, which is no bad thing, when you
think about it.
“London today is certainly a more
mature ecosystem. The fact that we’re
even talking about European unicorns
is an example of a good five years.”
Despite nearly 10 years in the
business, Mitchell knows that “cloud
collaboration” is yet to become a


Top: Martin Stiksel,
CCO and co-founder of and currently of Lumi;
Alastair Mitchell,
CMO and co-founder of Huddle
Bottom: Matt Cooper,
commercial director at Crowdcube

mainstream idea, although everyone
with an internet connection in the
UK is probably using the cloud every
single day.
“The challenge is that everyone
is trying to do a lot of today’s work
with yesterday’s technology. Most
businesses in New York and San
Francisco are entirely SaaS.”
And as around half of our workforce
will be staffed by millennials by
2020, he believes we’re going to see a
fundamental shift.
“They’re the digital native
generation, social and collaborative
by nature, not just sat at desks using
Outlook. It’s clear the enterprise IT
stack needs a good shake.”
What Mitchell believes London has
been good at in the past half-decade is
“playing to its strengths. Whether it’s
the NHS and health, retail, as we have
the most sophisticated retail market
in the world, or fintech. This reflects
what Britain is really good at.”
In its Agiletowns report, Deloitte
estimates 44,000 people now work
in fintech, of some 200,000 people
Oxford Economics says work in
London’s tech sector.
“But the single-biggest barrier is
that there is still not enough money
for late-stage startups and we’ve been
saying this for the past five years,”
Mitchell says.
“There has been a massive increase
in seed funding, accelerators, angels
and VC funds in the past five years,”
adds Simon Menashy, investment
director at MMC.
“Lots of new capital, support and
mentoring has come into the market
that means London can create and
support an ecosystem of thousands
of startups a year – developing into
proper little companies – and we are
2015 ••

SPECIAL report


the lucky recipients of five years of
increasing prospects.”
But he echoes Huddle’s concern.
“The area that has changed the least is
Series A and beyond. We look after a
$100m fund and around $20m of that
is invested in the UK. There are only
around 10 VCs in London operating
at this level but I would like to see 10
“All the unicorns have been funded
outside the UK,” Mitchell continues,
emphasising his company’s plan
to “hopefully float or exit here. The
message is: you should start your
business in London, but ultimately
move somewhere else, which is a
shame. It should be: start in London,
get investment in London, grow, grow,
Step in V.2 fintech upstart Crowdcube,
founded in 2011 as the world’s first
crowdfunding platform.
“Having more and more fintech
AUTUMN 2015 •

businesses scale quickly puts a great
focus on the industry and that’s
been great for us,” says Matt Cooper,
commercial director at Crowdcube.
“London is now the fintech capital of
the world, from the proximity of the
City of London offering up top minds
in the world, to the finance industry
that’s ripe for disruption.”
But CrowdCube was *whisper
it* not even created in London and
maintains its Exeter HQ.
“We work hard at finding talented
people who want a lifestyle change
if they’re going to be moving from
London to Exeter. It’s usually
someone looking for something more
than a tech business in London.
“But there are other people in
the business who want the Silicon
Roundabout vibe, that’s why we
opened up in Dean Street in Soho,
right between the entrepreneurs in the
East and the investors in the West.”
As the brave market-movers in
peer-to-peer investment, Cooper

admits it was Tech City that really
spurred its model along.
“There is a strong pull to London,
not least because all of our customers
and the businesses raising money are
in London and the South East. We’ve
grown up with Silicon Roundabout –
with the incubators and accelerators
– and we’ve got people over there all
the time.”
He says Crowdcube was “right
place, right time, right solution. We
found something traditionally hard for
businesses to do – raise finance – and
took it online and democratised it.
There were lots of early Old Street tech
and digital entrepreneurs and so we
went out and talked to them.
“Founders and CEOs now
understand that they don’t need to
speak to the bank manager about
growth capital – they can engage with
and grow their customer-base at the
same time.”
Having just seen its first exit, E-Car
Club, and with the amounts raised on

SPECIAL report

its platform pushing the £1m mark,
the company is now seeing significant
growth in debt crowdfunding too, as
opposed to equity, but Cooper assures
us the best is yet to come.
That could mean US expansion,
if regulation catches up with the
“forward looking” policymakers here,
as well as a new Manchester hub.
“There are talented businesses,
entrepreneurs and founders in
Manchester and we’re wondering if it
can replicate London. There isn’t great
availability of early-stage funding,
but there also isn’t great awareness
of alternative finance outside of the
South East.”
Alongside this, Crowdcube has
been busy building partnerships with
the likes of Index Ventures. “Five
years ago, a retail investor or a fan
of a business couldn’t partner with
investors like Index and Passion
Capital on the same terms. For
VCs, joining a crowdfunding round
is a great way of validating the
Cooper says Crowdcube is ultimately
hoping to “put the public back
into IPO” by facilitating the first
crowdfunded listing via the Crowdcube
“It’s really great to see that V.2
companies are getting bigger, better
and faster than us,” observes Huddle’s
Ali Mitchell. “There are certainly more
VCs and more money coming into the
EY estimates that more than 1,000
international tech investments have
been made in London from 2005
to 2014, and those now joining the
startup ecosystem certainly have many
things to thank their forerunners for.
“I started the business straight after
uni,” says Oxford grad and travel
app founder Alick Dru. “I was meant
to go and work in a bank but the
idea of banking was so depressing.
Fortunately people loved the idea of
Tripr and I already had people offering
me money.”

Having raised an £80,000 angel
round in November last year, Dru
says the company will probably go
down the crowdfunding route for its
next cash injection. “We’ve heard of
some really good success stories on
But the nine-person travel outfit is
currently working out of a garage in
South Kensington, which Dru calls a
“very good deal”, and while South Ken
is certainly not a northern sink estate,
it’s not ideal.
“We found coworking to be very
expensive. We were three people
and we had to pick: nice office or
grow?” Their unusual office dwelling
is currently composed of a sink, a bar
fridge, a lonely beanbag and a “very
powerful router”.
“There are a lot of options for
coworking and it makes sense for
really small startups we made good
contacts and a talk on R&D tax credit
breaks meant the space paid for itself,
but it’s not viable for us now. There
isn’t really a middle ground: you’re
either renting an office or coworking.”
And Tripr also had a “nightmare”
few months of hiring. “We had some
people who came from the City and
said they had lots of experience but
they had none. And they didn’t seem to
like the hours, or the environment.
“So in the end we went straight
to the universities, tracked down
the computer science groups at
Cambridge, UCL, Imperial and found
some absolutely incredible people.”
“We’ve also got a new female
director who was one of the founding
team of Generator Hostels,” Dru
adds, a relationship that no doubt
demonstrates the buzz of the startup
ecosystem at work.
“Five years ago, people from
government would turn up and say
‘we’re not going to get in the way’
and then spent 10 minutes getting in
the way,” MMC investment director
Menashy adds. “But what’s changed
the most for me is that it’s now cool to
be an entrepreneur. It’s acceptable to
work for a startup and explain that to

your mum.”
He points to the financial crisis,
youth unemployment and changes in
the labour market that mean “the jobs
our mums and dads had just weren’t
available anymore” as key catalysts.
“Tech is eating its way into the lower
skilled jobs on offer,” Angus KnowlesCutler, senior partner at Deloitte, says.
“Because of automation, high-risk jobs
make up 30% of London jobs, meaning
they’ll likely be gone in 10 to 20 years.”
Outlining the findings of his
Agiletown report, he says that from
2001 to 2014, a mere 13 years, half of
all secretarial jobs have gone in the
city, along with more than a third of
travel agents.
“But for the jobs that are
disappearing, this is more than
made up for – so we end up with
net 300,000 more jobs, 200,000 of
which are high-skilled. In the league
table of global cities London leads in
22 sectors, including theatre, higher
education and professional services.
In the EU, it is the leading high-skilled
Knowles-Cutler believes that we
need a permanent “chief talent officer
to pull all of the strands together,
working with national government,
the Greater London Authority and the
boroughs. And something we have to
tackle is lobbying for an intelligent
visa system. We don’t have the level of
supply, so high-tech digital skills have
to come from outside the EU.
“But we really have to be thinking
five to 10 years out, making sure
that schools, colleges, universities
are producing people into the
workforce who’ve got the skills for
the London of tomorrow.” Indeed, in
The Entrepreneurs Network’s annual
Parliamentary Snapshot, improving
the skills of the domestic workforce
has been the top cross-party priority
for two years running.
In a report for London Technology
Week, Boris Johnson said some £1.5m
has been invested in computing in


AUTUMN 2015 •

SPECIAL report


schools in the Capital since 2013, but
some of Tech City’s biggest challanges
have been around local education.
While there may be coding courses
aplenty, the Ada Lovelace Academy
failed to get going, the speciallydesigned Hackney UTC has closed
and the STEM Academy has been
blasted by Oftsed and taken over by an
academy chain.
“The tech sector has been slower
than we’d hoped to embrace the Tech
City Apprenticeship programme,” says
Ian Ashman, principal of Hackney
Community College. “This is an
example that gives some credence to
the criticism that the local population
is not benefiting as much from Tech
City growth as they might.
“However, we’re developing and
shaping the programme all the time to
make sure that it meets the needs of
tech businesses and we look forward
to more companies joining us to bring
more new local entrants, from more
diverse backgrounds, into the Tech
City talent pool.”
Ekaterina Punter, computer science
teacher at the STEM Academy, soon
to be rebranded under the ‘Tech City’
banner added: “Real involvement of
real tech employers is what education
in the UK needs. Working in tech is
cool and the best way to let young
people know about it is to give them
work placements in tech companies
or invite them over for a career talk.
London needs more programmers:
help schools to make them.”
Further to this, a proposed civic
space to be opened on the roundabout
that City Hall had secured £50m for,
and would be used to help get 10,000
people coding, was also scrapped this
time last year.
“Tech City has really dissolved,”
says Ali Mitchell from Huddle. “The
cluster is spreading west, over to
Farringdon and King’s Cross. And
there isn’t as much community spirit –
because everyone is so spread out.”
“One of the biggest risks we see to
London’s future success is the cost of
housing,” warns Deloitte’s Knowles-

AUTUMN 2015 •

Cutler. “There are lots of young,
highly-educated people coming into
London but it’s a real struggle as the
cost of housing goes up and up and up.
“But who owns the problem? We
need a strategy that looks at the
availability of housing, making the
planning system more efficient, and
public and private partnerships.”
Although Boris Johnson’s 2020 Vision
for London outlined the need to build
40,000 homes per year, earmarking
brownfield sites, we’re currently only
delivering around half of these.
The London Enterprise Panel, led
by the Mayor and bringing together
key stakeholders from across the
city, likewise identified this problem
in its London: 2036 report. The
group believes £1tn will need to be
spent between now and 2050 to
accommodate population growth.
Deloitte has started subsidising
deposits and rents for its new young
staff via a partnership with the
Olympic Park’s Here East project,
which, along with long-awaited highspeed broadband, is one of the biggest
promises from David Cameron’s 2010
speech that is yet to be fully realised.
“For Tech City firms, housing is
hugely important to the growth of the
London economy and our approach at
Deloitte doesn’t solve their problem,”
Knowles-Cutler says.
But entrepreneurs like Lastminute.
com’s Brent Hoberman, V.0 headliner,
have mixed views on government
intervention. “Tech City has a great
brand and has been very good
internationally to get the message
across that government is very serious
about leading the world in Europe. But
it’s good that growth has gone beyond
East London – that was my issue with
the whole idea,” he says.
And on future government
intervention to address continued
gaps, like space, Hoberman adds:
“Space is key but we have a lot of
incubators and more coming, along
with advice and mentors. Do we need

government to do it? I think that the
private sector can address this.”
So, the ecosystem that is, or was,
Tech City has broken beyond its East
London roots, which, just as in the
wild, has knock on effects to local and
wider interconnected elements.
There are now more than 70
coworking spaces and upwards of 30
accelerators across the apital, which
are becoming increasingly specialised
to meet more sophisticated startup
UKTI’s Tech City body has
expanded too, heading up north, and
looks to have stayed within the £15m
budget set out by the PM half a decade
ago, racking up around £8.9m of
spending, largely in salaries.
And building on the devolution to
the regions Boris Johnson has now
approached communities secretary
Greg Clark to ask for greater powers
over areas like skills, transport and
Oxford Economics believes that
the tech sector will bring in £18bn by
the end of this year, demonstrating at
least in pure financial terms a success
you can’t reallyargue with. Investor GP
Bullhound, likewise, has picked out 17
much-mythologised unicorns, largely
in fintech, that it thinks will break the
$1bn mark.
Questions remain on where we go
after fintech. Can we, as Boris Johnson
suggests, be the cleantech capital of
the world? How can London compete
with Asia and the US to back the next
big world-changing companies? How
do we make sure we have the space,
skills and homes that we need to help
entrepreneurs get there?
And, finally, although we may be
beating Silicon Valley, do we think the
tech sector is truly representative of
the audiences it serves across class,
gender and ability? If not, is it our
responsibility to change that?
This is certainly not the end of
the tale of Tech City, perhaps the
sequel will be called: ‘Tech London:
this time we kind of know what
we’re doing’? ■