Other areas are worth considering. There’s been a surprising uptake of City property with tech companies. Shepherd’s Bush and White City are up and coming. Croydon may not be glamorous but already has 325 tech businesses with far lower rents than East London. Startups can still happen in London without the EC1 postcode – and it’s easy enough to get to.
Innovating Office Spaces
Still, many entrepreneurs insist that ‘down the road’ isn’t the same as being there. The other solution is to provide more innovative spaces. Shared workspaces have been central to the Shoreditch vibe since the beginning – particularly in the ‘incubator’ model – and that’s one route; taking a desk or a handful of desks is much cheaper than getting your own office. And plenty of shared spaces still open.
But there are also projects like Containerville along Regent’s Canal, a ‘container city’ of offices in shipping containers–where a whole container goes for just £1,200 per month (including bills and service charges). There’s still a location premium, but it’s far more affordable than in traditional office space.
Fueling Finance in London’s Startup Community
If shipping container office space can bring costs down, the other route is pushing bank balances up. Although not all firms need outside finance, it can certainly help–and is certainly essential. And funding is difficult to get. In a Demos report, a venture capital firm “told us they’d seen 1200 ideas, met 30-40 people and funded three.”
There are plenty of structural problems associated with tech startup funding far too detailed to go into here. But the simple version is this: most UK investors put their money into the UK, and not enough of it goes to tech startups. Investing in startups is risky, and most investors are risk averse. So it’s understandable why the tech startup sector doesn’t attract the lion’s share of private investment. But if we’re serious about leading the world in tech innovation we need to find ways to channel some of that investment into admittedly risky propositions.
Nothing happening in Shoreditch, or Silicon Valley for that matter, contradicts market logic. But sometimes, when you really want something to happen, you need to influence the market. The government’s Tech City programme shows how serious they are about supporting London start-ups (though pulling the £50m regeneration grant isn’t a good sign).
If they’re really serious about Silicon Roundabout, perhaps it’s time they stepped in. Not direct funding necessarily, but some well-placed tax breaks and guarantees could help funnel some of that investment money from FTSE tracker funds into EC1.
Editor’s note: The EC1, Eastern Central postcode area, also known as the London EC postal area, is a group of postcode districts in central London, England.
This article has been edited and condensed.
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