The traffic circle at the intersection of Old Street and City Road in East London’s Shoreditch neighborhood would be just another ugly piece of urban infrastructure if it hadn’t become identified with the city’s booming technology industry.
The circle – or roundabout, as the Brits call the familiar road features – is at the heart of a cluster of high-tech firms ranging from Google and Intel to hundreds of startups that have opened their doors in the last four years, generating a creative cluster that has invited comparisons with California’s Silicon Valley.
Not to be outdone – although with typical understatement – the Brits have dubbed their flourishing tech center Silicon Roundabout after the less-than-glamorous traffic circle at the center of their district.
The industry has grown from an estimated 15 firms in 2008 to more than 700 now, helped by a range of incentives from a government that has been eager to create jobs in an economy that is showing little or no growth.
By the end of 2011, the district a few miles east of London landmarks such as the Houses of Parliament and Buckingham Palace was home to 774 tech businesses, according to the Tech City Investment Organization, the government department that was set up to promote the industry and attract investment to it.
They cover 17 categories ranging from digital advertising to data analysis and clean-tech enterprises. The biggest classification is digital marketing, comprising 16 percent of the total.
Major technology firms doing business in the ‘Roundabout’ area include Facebook, Cisco, Intel and Vodafone. In September 2011, Google announced plans to lease a seven-story building in the district to help nurture local startups with activities such as training workshops, speaker series, and product demonstrations.
Less well-known participants in the district include Tweetdeck, a social media dashboard application for the management of Facebook and Twitter accounts, which was acquired by Twitter in 2011, and Skimbit, which seeks to monetize social networking through shopping.
Seeking to Build an Economic Growth Engine
The industry’s economic potential has not been lost on U.K. Prime Minister David Cameron who in November 2010 announced measures to accelerate development of the industry which he said would become one of the world’s leading tech centers.
Government incentives include the Seed Enterprise Investment Scheme (SEIS), announced in October 2011, which enables investors to benefit from a 50 percent tax relief for the first 100,000-pound seed investment. In 2012/13, investments made via the SEIS will never be liable for capital gains tax, making what the government says is one of the most generous early tax breaks available anywhere in the world.
The government also boosted upfront income tax relief for private investors from 20% to 30% – bringing the scheme in line with the relief available in contributions into venture capital trusts. The amount that any individual can invest through the scheme has doubled from 500,000 to 1 million pounds a year, and the size of the company that can qualify for investments has increased.
Tech City is working to attract new businesses by helping secure foreign direct investment, engaging with overseas venture capital firms, and raising the international profile of the cluster.
The agency said in May that in its first year of operation it helped attract 37 new companies to the district, ahead of its target of 26, and built relationships with VCs including Sequoia and Kleiner Perkins.
All the activity has attracted Silicon Valley Bank which opened its first UK branch in June this year. Academic backup for the new industry is coming from London’s Imperial and University Colleges, and from the UK’s Loughborough University.
Among the companies now active in the ‘Silicon Roundabout’ are those who are developing technology to monitor energy and environmental performance for customers seeking ways of cutting both their energy consumption and their carbon footprints.
This is the first article in a four-part Breaking Energy series covering the emergence of London’s Silicon Valley. Check back throughout the week for additional articles that focus on several companies now operating in the Silicon Roundabout.