Tech Powers the London Economy

The Tech City 3rd Anniversary Report

Foreword
We are competing in a global race and I am absolutely
determined to make Britain the best place in the
world in which to start and grow a business. The world
of business is changing rapidly and one of the most
promising opportunities for new jobs and growth lies
within a new wave of high growth, highly innovative
digital businesses. This is why, as part of our plan to
help Britain succeed, we established Tech City UK to
support the creation of a technology cluster in East
London and committed to help these businesses to
become cornerstones of our economy.
Weve had real success. Today Tech City serves not only as an example of how a
city can be transformed into an engine for growth and innovation, but it is also a
blueprint for fostering growth that has been recognised globally.
The combination of the right policies, the right people and the right programmes,
backed by a Government that listens and takes action, has led to some of the
worlds best entrepreneurs and their companies choosing the UK as their home.
Weve removed the obstacles to success one by one and, by creating new policies,
developed in direct response to the needs of start-ups and entrepreneurs we now have
a compelling package of support for entrepreneurs and businesses at every stage.
As well as backing the businesses of today we are also backing the businesses of
the future and in just three years we have seen London become a leading centre for
innovation, helping to drive our economic recovery.
But this is not just about London. We are determined to build a rebalanced economy
across the country and get behind the entrepreneurs imagining a new tomorrow in the
dozens of technology clusters, accelerators and start-up incubators across Britain.

David Cameron MP,

Prime Minister

Like most entrepreneurial initiatives, Tech City

began with an ambitious mission: Turn East London
into a global hotbed of innovation, entrepreneurship
and creativity. For an area better known for its street
art than its startups, this sounded like a lofty goal.
Yet three years on, a real transformation has
happened, not just in East London, but in all of
London. From a city previously reliant on the
financial services industry, we have established
London as Europes digital capital and a true
challenger to Silicon Valley and New York.
The results werent late to follow. The number of
tech and digital companies in London almost doubled between 2009 and 2012, and
there are now over half a million people employed in the sector, driving 27% of all
job growth across the capital. Whats more, jobs in this sector have grown by 16.6%
during the same period, against an overall growth rate of 0.3% across Great Britain.
We are living through an amazing period of technology-driven creativity and
innovation that holds the potential to transform society, culture and business on a
mass scale. The UK has a pivotal role to play. Accordingly, this report outlines our
recent achievements and provides a blueprint for the future.
Weve come a long way in three years but this is just the beginning. Weve
proven that we can accomplish great things when we set our minds to it. Now our
challenge is to build on that foundation and ensure that the next generation of
entrepreneurs and their investors see the UK as the best place in the world to
imagine, start and grow a business.

Joanna Shields,

Chief Executive, Tech City UK

Executive Summary
In 2010 a new breed of digital companies was beginning to emerge in
East London. Young, innovative and nimble, these startups were using technology
to reimagine industries as diverse as finance, fashion, advertising, media and
gaming. Recognising the potential behind these companies and their unique
requirements for growth, Prime Minister David Cameron created a new initiative
to support the development of this technology cluster in the heart of East London,
and called it Tech City.
In November 2010, Tech City was established to identify the needs of the cluster,
attract inward investment, act as a liaison with
the government to remove barriers and
create opportunities for future growth.
Three years later and Tech City has
become not only a national success
story, but also an international one. The
cluster is now recognised as Europes
digital capital. Technology leaders such
as Google, Amazon, Samsung, Intel
and Cisco have all set up offices in
the area, followed by fast-growing
startups such as Hailo, MindCandy,
Unruly Media, Transferwise, Import.io

New government policies backed by Tech City, such as the Enterprise

Investment Schemes, R&D tax credits, the Patent Box and a mandatory
opening of Government Procurement to small companies have already
made a significant impact on the sector. Initiatives such as the the Future
Fifty programme, the creation of the new FTSE Digital Services Index and the
High Growth Segment on the London Stock Exchange reflect the growing
importance of high growth technology companies to the UK economy. Finally,
changes to IPO regulations will act to catalyse higher rates of lisitngs, while
the strengthening of regional technology clusters is creating a landscape
favourable to the growth of digitally enabled firms across the country.
In a landmark initiative supported by Government, the Open Data Institute
launched in Tech City in December 2012. Today the UKs open data
infrastructure is world-leading, with over 10,000 public data sets, and the
ODI have announced the creation of 13 nodes around the world to support
open data projects and encourage cooperation to solve local and global
issues and problems.
Ensuring future growth will require continued collaboration between
Government, local authorities, communities and the technology clusters
they are home to. The good news is that the momentum generated by the
tech/digital sector is not only supporting our economic recovery, it has also
catapulted the UK to become one of the worlds leading digital economies.
And if the results in this report are any indication, the UK is well on its way to
becoming the best place in the world to imagine, start and grow a business.

and Huddle.
Led by the expansion in East London, the Capital has experienced
considerable growth in the tech/digital sector between 2009-2012. Some key
findings in this report include:
During the period between 2009-2012 the number of tech/digital companies
incorporated in London grew by 76%.
Employment in the tech/digital sector in London grew by 16.6% against
an overall growth rate of 0.3% acrossGreat Britain.
A staggering 27% of all job growth in London now comes from the
tech/digital sector.

Imperial College London, University College London, Ravensbourne, Hackney

Community College, Newham College, Massachusetts Institute of Technology,
General Assembly, Entrepreneur First
Passion Capital, Index Ventures, Decoded, Booking Bug, Berg, EE, Cisco,
Samsung, Intel, O2, Google, BT, Box, Eventbrite ,Tech Hub, The Trampery,
White Bear Yard, Warner Yard, Central Working, Tech Stars, Seedcamp,
Tech London Advocates, The UK Business and Technology Cluster Alliance

Acknowledgments
Tech City UK wishes to thank the following individuals and organisations
for their support in the production of this report:
Our Data Partner: EMSI a CareerBuilder Company
10 Downing Street, UK Trade and Investment, London and Partners,
Department of Transport, Department for Business, Innovation and Skills,
Cabinet Office, Government Digital Service, The Technology Strategy Board,
The Open Data Institute, The London Borough of Hackney
McKinsey and Company, Blue Rubicon, The London Stock Exchange Group,
Barclays, The British Venture Capital and Private Equity Association

TECH CITY:
THE BEGINNING

Our competition is only going to be in other cities that have similar

kinds of characteristics. And the city that comes to mind is London.

In November 2010, Prime Minister David Cameron outlined a compelling vision for
East Londons future as a world-leading centre:

As s part of our strategy for growth, weve made a really important

decision. Were not just going to back the big businesses of today,
were going to back the big businesses of tomorrow. We are firmly on
the side of the high-growth, highly innovative companies of the future.
[This is] our vision for East London Tech City.
David Cameron, Prime Minister (Nov 2010)
The vision for Tech City was bold and ambitious. The area was always known as a
creative hub, but its reputation was local, or at best national, rather than global. As such,
East London was not attracting substantial foreign investments or gaining the critical
mass that was required for a world leading tech/digital cluster.
To help fulfill this vision, Tech City UK was established to work with other partners
and stakeholders to promote and support the growing cluster of technology and digital
businesses in the area. During this time, the area known by locals as the Silicon
Roundabout has become the nucleus for the digital revolution that has swept
across London, catapulting it to become the worlds digital capital.

Even though there were a growing number of tech companies around Silicon
Roundabout, it didnt feel like there was a real network in Old Street of like-minded
companies, sharing knowledge, expertise, and contacts. We knew that if we could
ignite the area, wed not only be working together, but that would bring in more
people, more ideas, publicity and the services we needed a proper community.
And ignited it has. In a few years, its gone from being a fragmented scene to an
entire ecosystem its a great place to be in.

Michael Bloomberg, New York City Mayor

The following pages highlight the performance of London and East Londons
tech/digital sector between 2010 to date. The significant increase in
performance against key indicators reflects a tremendous growth story
for this sector. In looking at this growth, we will also
look to the work and dedication of the many key
players within Londons tech/digital ecosystem.
Their efforts cannot go unrecognised when
examining the Tech City story.
We then look at the initiatives taken in the
three main areas identified as priorities:
1. Raising awareness by shining a spotlight
on Tech City,
2. Attracting inward investment,
3. Steering policy decisions to address barriers
to growth such as lack of talent, skills, and
financing, and rewarding innovation, opening
up government procurement to small business,
nurturing growth stage businesses and improving infrastructure.
This report outlines recommendations from the business community,
policy initiatives and programmes developed to ensure that Government
can continue to remain in step with the rate of change brought about by
the tech/digital sector and outlines for Tech City UK in 2014.

The community of knowledge is excellent, much better than it has ever been.
There are start-up specific services that were hard to come by before, from legal
services to job fairs; from meet-ups to co-working spaces. And its now a place that
VCs visit, so theyre easier to meet and they can see the energy in the area. Its
incredible to see the development of Tech City.

Matt Webb,

Founder and CEO, BERG

Growth
in Londons
Tech/Digital
Sector 2009-2012
27%

of job creation in
london came from
the Tech sector

Number of
Tech/Digital
Companies
Incorporated
in London
2009-2012

In London, between 2009-2012, the net growth of jobs in the

Tech/Digital/Media industry was equivalent to 27% of the net
growth of employment across all industries.
In London, job growth in the tech/digital sector outpaced job growth
in all other industries:
# of people
employed

Between 2009 and 2012, the number of people

employed by the tech/digital sector grew from
499,000 to 582,000.

Growth
rate

The tech/digital sector grew at a rate of 16.6% in

London between 2009-2012, against a growth rate
of 6.0% in other industries. This means that
Londons Tech/Digital/Media industry grew 2.7
times faster than all the other industries.
In the same period, the net growth of jobs in Great
Britain was 0.3% (all industries considered).

Tech
Salaries

In 2012 alone, people employed within Londons

tech/digital sector earned over 28 billion in salaries.

Tech
Occupations

Between 2009 and 2012, the number of tech/digital

occupations grew from 381,000 jobs to 438,000,
representing an increase of 15%.

49,969
2009

63,099
2010

88,215

77,343

2011

2012

East Londons Flat White Economy

The Economic Effects of the Cluster
Between 2009-2012, East Londons
tech/digital sector accounted for
40% of all job growth in the Tech/
Digital/Media industry in Great Britain.
In East London, there are approximately
140,000 people working in the core
tech/digital occupations, of which,
88,000 (63%) work in the
Tech/Digital/Media industry.

in
jobs are in the
tech/digital sector.

Jobs outside of the tech/digital sector

grew by 8.4% vs 6.0% in London overall.

See appendix for definitions/methodology

10

11

Central to the Tech City story has been the phenomenal success of young
innovative firms disrupting traditional business models. Start-ups such as
Shazam, Hailo, Transferwise, Zoopla, Just Eat, Huddle, Achica, MOO.COM
and Swiftkey are leading the way in creating new products and
business models and are as a result experiencing
phenomenal growth. Another central component of
the Tech City message has been the support the
Government has shown the technology
community through an ambitious package of
globally leading policies designed to support
businesses at each stage of their lifecycle and
ensure that London and the entire UK is the
easiest and most attractive place to start and
grow a digitally enabled business.

Shining a
spotlight on
Tech City

Following this success, Tech City grew

geographically and expanded well beyond East
London. This broadening of scope was a reflection of
the growing presence of start-up activity across the city,
and the increasing convergence of digital technology with
Londons other key industries: finance, fashion, music,
advertising, media and others. The result was an increase in promotional
activities centred on the message that London is the ideal destination for
start-ups and growth stage companies, and the most suitable destination
for foreign firms to base their international headquarters. As such, 2013
reflects tremendous growth in reach and visibility for London as the
fastest growing digital capital in Europe.

Starting from 2011, Tech City UK undertook a variety

of activities to promote and advocate for the cluster of
technology businesses based in East London. Since
then, the Tech City UK team has spent thousands
of hours telling the story of the UK technology sector
and reaching millions of people in the process.

12

13

2008

Number of articles written over time:

2009

2010

43 58 147

2011

2012

2013

802

1,422

2,526

Full list of
countries where
Tech City coverage
has appeared
Nov 2010 - Nov 2013

A Global

United
Kingdom
United States
India
China
Germany
France
Ireland
Canada
Australia
Israel
Dubai
United Arab
Emirates
Japan
Singapore
South Korea
Qatar
Russia
Chile
Croatia
Czech
Republic

Brand
Total of 5,003 Articles

Referencing TECH CITY and LONDON (Jan 2008 - Nov 2013)

Geographic spread (where published) of the 5,003 articles referencing
Tech City AND London (Nov 2010 - Nov 2013)

Volume of tweets

talking about Tech city dec 2010 - Nov 2013

155,725
Dec 2010- Nov 2013

14

South Africa
Portugal
Switzerland
Lithuania
Syria
Italy
Spain
Belgium
Libya
Greece
Saudi Arabia
Finland
Netherlands
Mexico
Malaysia
Latvia
Pakistan
Sweden
Denmark
Brazil

TECH CITY UK TEAM outreach

Over 1000

national and international outreach & awareness events

attended by the Tech City Team

Over 80

International delegations hosted

15

The Global
Tech City:
Driving Inward
Investment
Increased global awareness of Tech City and
London has led to a significant rise in interest from
international firms looking to set up in the Capital.
A key driver behind this increase has been the partnership between Tech City,
UKTI and London & Partners who have collaborated to attract investments and
partner with many international and domestic firms such as Samsung, Warner
Brothers, MassChallenge, EE, The Loop, Kiosked, Payango, Cisco, Google,
ZipZap, Quirkat, Huawei, Brightstar, Kano, eToro, Box, Survey Monkey,
Shopzilla, Eventbrite and iZettle to name only a few.
These organisations together have worked to deliver 159 tech/digital firms into

Building out our international headquarters in London was the

perfect choice for Box as a rapidly growing enterprise software company.
London has all the elements you need for a strong startup community
to blossom and evolve. With the government support and the mix of
capital, talent, universities, companies and startups, there is tremendous
innovation and talent beginning to emerge.

Aaron Levie,

Co-Founder and CEO, Box

At General Assembly, whenever we look to open a campus in a major

new city, we appreciate opportunities to partner with Government because we
believe in the power and potential of public and private partnerships to provide
skills based education. We have found in the UK that the Government
recognises and embraces the need for companies like General Assembly to
exist and enable this practical, outcome-focused learning to fill the skills gap so
many countries are facing when it comes to technology, business and design.
Being located in Tech City was the natural choice for us as we work
hand-in-hand with the community, in terms of sourcing instructors, attracting
students and providing apprenticeship placements.

Matt Cynamon,

Regional Director, General Assembly

the area between 2011 and November 2013. This activity will directly generate
5,762 new jobs into London over a 3-year period and will indirectly generate an
additional 6,684 jobs.
Londons real estate investment market is also on the rise. According to ULI and
Nabarro Real Estate, London has been the most traded market in the world in
2013 with over 50% of central London commercial real estate in the ownership of
overseas investors. Between 2009-2013, Knight Frank estimates that over 28
billion has been invested in commercial property in the Tech City post codes, and
in 2012-2013 alone Savills estimates that tech/digital firms have taken up over
4 million square feet in office space across the Capital.

16

17

Community Case Studies:

London offers the most welcoming and flexible commercial environments in

Europe thanks to business-friendly legislation, lack of red tape, and low taxation.
Furthermore, a pool of diverse talent, skills, expertise and ambition, combined with
Londons geographical location, gives unrivalled accessibility to the rest of Europe.
London is also home to a world leading financial hub, offering access to Europes
largest venture capital community; and a test-bed of sophisticated early adopters,
making the city particularly attractive to ambitious companies looking to test ideas
and accelerate their growth.
Nowhere is this better evidenced than in the phenomenal success
of Tech City the beating heart of Londons new economy. Home
to Europes largest concentration of tech start-ups and with an
impressive track record for turning innovative ideas into profitable
businesses, London companies are helping us relax on private
islands (Airbnb), pay securely using our smartphones (iZettle),
and raise cash from crowds (Seedrs), all at the click of a button.
Equally, bigger businesses including the likes of Facebook, Cisco
and BMW are attracted to this extraordinary environment, seeking
the entrepreneurs of today to help them innovate and grow.

Londons competitive advantage is this unique partnership; nowhere else in Europe

will you find such an exciting convergence of big brands and start-ups, funding,
political backing and talent. Programmers, cutting edge creative thinkers, data
scientists, educational innovators, financiers and marketers from across the world
are fusing together harnessing Londons resources to grow their ideas, and helping
to cement Londons standing as a leading global tech hub.
London & Partners has been honoured to support the growth of the cluster around
Tech City, influencing more than 60% of recent investment, and attracting and
supporting major tech conferences and events across the capital.
We are committed to continuing our support in the future to grow the cluster, so
that companies with new ideas can succeed and scale their businesses in London,
ultimately driving the digital economy into the future.

Gordon Innes,

CEO, London & Partners

18

The London Borough

of Hackney
The London Borough of Hackney encompasses the Old Street Roundabout and
Shoreditch areas of East London, a significant part of the area know as Tech City.
For us, supporting the creative tech sector has been a major priority of our business
development and economic policy. In terms of physical infrastructure, weve protected
the commercial space, developed an attractive public realm with a vibrant street life
culture to go with it; and we work with developers to ensure that new work spaces
offer a portion of affordable, usable workspace for start-ups and young creative tech
businesses. We help shape the local culture championing smaller independent
cafes, restaurants and pop-up food, art and galleries a vital part of the areas
cultural and business mix.
Hackney Council helps showcase the best in creative tech.
In 2012 we created Hackney House a 10,000 sq ft pop up
business and performing arts pop up venue in Shoreditch
which ran from May to September. Hackney House welcomed
over 40,000 business visitors, investors and gave a
showcase to local tech and creative talent. In March 2013,
we took twenty five local creative tech businesses to the
South by South West Festival (SXSW) in Austin Texas for our
new pop up business venue, Hackney House Austin. In September 2013, working
in partnership with local companies, we opened BL-NK on East Road, in the heart of
Tech City a 3,000 sq ft business showcase, digital arts and networking venue for
use by the local creative tech business sector (www.bl-nk.org).
In 2013 Hackney Council was awarded the Government department for Business
Innovation and Skills (BIS) prize for Encouraging Business to Export.
Through our newly re-launched business and investment website
www.investinhackney.org we host regular networking sessions and communicate
with businesses through our Hackney Business Network newsletter and we regularly
work with local companies to find staff and apprentices for them locally.
Our commitment to supporting Tech City and its local business base continues with
new initiatives, overseas business friendship agreements and developments to match
the creativity of the sector itself.

19

Policies:
Driving Growth
Over the last three years, Government has worked
directly with the Tech City community as well as
representatives from technology clusters across the
UK to understand the principle barriers to growth
for technology and digitally enabled businesses.
Feedback from business leaders in the tech
ecosystem has come through a variety of channels.
One regular channel through which policy makers have been able to capture
feedback and information has been through the Tech City Breakfast events,
which began in 2011. Held at Number 10 Downing Street, the breakfasts are
a regular gathering of technology entrepreneurs, start-ups, large corporates,
investors, support organisations and thought leaders. The breakfasts have
provided a forum through which policy makers can hear first hand from the
tech community about pertinent issues facing this rapidly evolving sector.

The principle challenges raised by entrepreneurs and

business leaders within the technology sector can be
broadly categorised as follows:

Education, Skills and Talent

Access to Finance

J Supporting Growth Businesses

Opening Up Government Procurement

Rewarding Innovation
Infrastructure
Government has listened to the challenges faced by young and
growing businesses and wherever possible, policies and programmes
have been put in place to help address these barriers. This section
highlights the policies which have been created in response to direct
feedback and consultation with the business community.

We attended a Tech City Breakfast at No. 10 at a time when we were

looking for office space for our start-ups and it needed to be as inexpensive
as possible. I got talking to the man sitting next to me, who turned out to be a
property developer in the Tech City area who wanted to build closer relationships
with start-ups. A week later we had a rent-free office in the heart of Tech City.
I cant see how that could have happened any other way.

Matt Clifford,

CEO, Entrepreneur First

Being located in Tech City was the natural choice for us as we

work hand-in-hand with the community, in terms of sourcing instructors,
attracting students and providing apprenticeship placements.

Matt Cynamon,

Regional Director, General Assembly

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21

 Education,

A Curriculum for the Digital Age

Skills and Talent

Access to the right talent is
often cited as one of the biggest
challenges for businesses of all
sizes. To help address this,
Government in partnership
with various partners, has
introduced a series of measures
to help address the skills
shortage that many of todays
technology businesses face.

To develop Tech City as a world-leading tech cluster, its key to attract

the best global talent: entrepreneurs who can build their companies here.
If entrepreneurs choose to start-up and grow their company here, they are
creating jobs and driving growth in the UK economy.

Saul Klein,

Partner, Index Ventures

Hiring the right people with the right talent remains a significant issue for

most technology firms today. This cant continue. How do we address this?
We can start to address the weaknesses in the education system at all levels
and we can work to create a place that draws the best people in because it is
somewhere they want to be. Tech City is quickly becoming this place. I would
argue that even more can be done to promote the area as the destination of
choice for tech talent.

22

This year, the Department of for Education announced a new world class curriculum.
For the first time, children will learn to programme computers. This will raise
standards across the board and allow for children to compete in the global race.

Imagine the dramatic change which could be possible in just a few years

Instead of children bored out of their minds being taught how to use Word and
Excel by bored teachers, we could have 11-year-olds able to write simple 2D
computer animations using an MIT tool called Scratch. By 16, they could have an
understanding of formal logic previously covered only in university courses and be
writing their own apps for smartphones.

The Rt Hon Michael Gove MP,

Secretary of State for Education

Support through the visa and immigration system

The Government is committed to supporting the tech industry by attracting
the very best global talent in the sector.
Entrepreneur Visa: introduced in April 2011, the Entrepreneur Visa encourages the best
entrepreneurs from outside the EU to set up and run their business in the UK. Successful
entrepreneurs are able to settle in the UK more quickly if they have created at least ten
full-time jobs or generated an income of at least 5 million.
Exceptional Talent Visa: Expanding on the Exceptional Talent route, by opening it up to
world-leading individuals in the digital technology sector. Tech City UK has agreed to become the
designated competent body for this route which we will open in April 2014. This will provide an
immigration route for individuals with a proven track record in developing successful businesses
or creating new innovations in the tech sector, allowing our technology industry to attract the best
global talent in the world. This builds on the package of measures UK Visas and Immigration
has introduced to support the tech sector and small and medium sized companies more widely.
UKVI has launched a targeted help-service for Tech Citys Future Fifty companies, to help guide
them through the immigration process when recruiting employees from outside Europe.
Home Office are also working with the Greater London Authority on a pilot to help SMEs
recruit international talent by providing a toolkit designed to meet their specific needs and a
dedicated helpline. The pilot is proving to be successful and if this continues the service will
be expanded outside London.

Kathryn Parsons,

CEO and Co-Founder, Decoded

Global Entrepreneur Programme: aimed to attract high-calibre, early-stage companies and

entrepreneurs to set up their headquarters in the UK and globalise their businesses from a UK hub.

23

The Intel Collaborative Research for Sustainable Connected Cities

A partnership between Intel, Imperial College London and University College London.
Dedicated to exploring how technology can support and sustain the social and
economic development of cities worldwide, the research centre collaborates with
Tech City start-ups to identify and analyse emerging trends in the area.
The Barclays and Ravensbourne Partnership
A joint programme of student internships and business design challenges
on world-class design and digital focused projects that will contribute to the
economic growth of thecreative industries.
IDEA London
Cisco, DC Thomson and UCL have joined forces, creating an innovation centre
in Shoreditch to support the growth of digital and media companies, in a unique
alliance between a world-leading research institution, a world-class information
technology provider and an international media company.
UCL and the Olympic Park

Working in Partnership
with Higher Education

Higher Education institutions have a critical role to

play in nurturing talent as well as driving innovation.
Government has worked with leading universities in
London and across the UK to deliver a new breed of
collaboration. These new initiatives will propel new
technical skill, business knowledge and research
capability into the technology ecosystem.

Todays best businesses understand they need many more

people with the highest quality technological education coupled with

entrepreneurial experience; just one or the other is insufficient.

Professor David Gann CBE,

Vice President (Development & Innovation),

Imperial College

24

UCL will work with the London Legacy Development Corporation to create a new
cluster for higher education on the Olympic Park. The new UCL development will
be part of a transformation of East Londons business economy with a focus on
arts, culture, design and innovation. These ambitious plans fit with Londons status
as a dynamic, young, global city that leads in research, culture and business.
Indeed, it has more of the top universities in the world than any other city.
UCLs presence on the Park will become a powerful draw for a creative, forward
thinking business community, uniquely able to access the resources of the
world-class research community to help drive innovation, jobs and growth.
Samsung Electronics Partnership with Newham College
Samsung Electronics UK, a leader in digital media and convergence technologies,
has invested 500,000 in a new Digital Academy in East London. In partnership
with Newham College the new Digital Academy will help tackle youth unemployment
and bridge the technology skills gap that is emerging in digital electronics as new
technologies enter the market.
The Samsung Digital Academy is a state-of-the-art training centre, which
provides young people with the skills needed to pursue careers in the information
and creative economy. It features three new training classrooms for practical and
vocational training, offering students the latest in-class teaching facilities with
Samsung mobiles, tablets, all-in-one PCs, e-boards and wireless printers.
MIT - Regional Entrepreneurship Acceleration Program (REAP)
UKTI is working with MIT, RBS/NatWest, and a team of corporates, entrepreneurs
and academics to set up a blueprint for supporting innovation communities. This
work will drive entrepreneurship both in physical locations and as part of a virtual
experience for entrepreneurs looking to succeed.
25

Imperial College London and Tech City

Tech City Apprenticeships and Hackney Community College
This apprenticeship programme has been developed to meet the skills and
employment needs of the growing Tech City community. Its thought that up
to 500 apprentice places could be created by 2016.

In the last five years we have seen the rapid expansion of the digital

cluster of businesses around us but had an increasing concern about skills

challenges for residents and employers. I was able to use networks such as
the Tech City Breakfasts at No 10 to talk about both the development of the
Hackney University Technology College (HUTC) and our idea to create a new
Tech City Apprenticeship programme. HUTC focuses on technical education
in digital technology and health. Its four-year programme is designed to
create the developer and tech entrepreneurs of by 2016 and the Tech City
Apprenticeship programme aims to create a faster, work-based learning
route into the tech industries.

Ian Ashman,

Principal, Hackney Community College

Imperial is plugged into the heart of Tech City. The Colleges Digital Economy Lab
is fostering connections between digital researchers and external organisations to
tackle the fundamental technical, social and commercial challenges
surrounding the digital economy. This includes the Digital City
Exchange programme, which enables researchers to harness next
generation digital systems to combine and repurpose city data.
These pioneers are exploring ways to digitally link city utilities and
services, creating new business and tech opportunities, which
could ultimately transform the way we use cities.
Huawei is planning to create a new data science lab at Imperial College London.
The Huawei-funded lab will operate within Imperials new Data Science Engineering
Institute. The Institute will cultivate multidisciplinary collaborations between the
Colleges academic experts and research partners to create the next generation
of big data technologies and businesses.
One of the top universities in the world, Imperial College London is expanding
the frontiers of knowledge in science, technology, medicine, and business, and
translating these discoveries into benefits for the capital.
Imperial nurtures a dynamic enterprise culture, in which staff and students join
Londons tech, medical and financial networks, and where collaborations with
industrial, healthcare and international partners are part of the fabric.
At Imperial West thousands of next generation thinkers will translate and
commercialise cutting-edge research for the benefit of our economy and society
as they develop exciting new products and services.
Imperial West is within easy reach of Imperials medical campus adjacent to
Hammersmith Hospital, and well connected via the Med City corridor to the
new Crick Institute at St Pancras among other R&D centres.
The mixed use 25 acre campus will stimulate new investment in research, yield
economic growth and play a leading role in the regeneration of White City.
The co-location of research, business and healthcare on this scale is unprecedented
anywhere in the world, reinforcing Londons position as a catalyst for scientific
development and economic growth.
Construction of the 150 million Research & Translation Hub the next major
development at Imperial West will finish in late 2015. It is funded by 35 million
from the UK government (HEFCE), 90 million from Voreda Capital and 25 million
from Imperial College London.

26

27

Funding for all

stages of Growth
Young tech/digital companies need easy access to early
stage finance to jump start growth. Through regular
dialogue with these young and growing firms, a number
of programmes and policies have been established to
support them at various stages of their lifecycle.

The creation of SEIS as well as the extension of EIS have had tremendous

impact on early stage companies by helping them attract more investors and
investment amounts. The benefit of up to 50% income tax deduction for angel
investors means the actual out of pocket (net cash) from the investor is only
50% of the actual monies thereby providing fantastic leverage for benefiting
companies. This doesnt even take into account the CGT benefit for the
investor which adds to the appeal.
Because S/EIS requires purchase of common shares and not preference shares,

For us, the Seed Enterprise Investment Scheme has had a

particularly important impact. By bringing new angel investors into the

market and incentivising investors to look at very early stage opportunities,
its made it much easier for the kind of start-ups that are emerging from

programmes like [Entrepreneur First] to receive funding.

Matt Clifford,

CEO, Entrepreneur First

The Enterprise Investment Scheme (EIS), introduced in April 2011,

boosted upfront income tax relief for private investors from 20% to 30%.
This means that the amount that any individual can invest through EIS has
doubled from 500,000 to 1 million a year.
To address this structural shortage of early stage investment, government
also created the Seed Enterprise Investment Scheme (SEIS). Introduced in
April 2012, SEIS is the most generous early-stage tax break in the world,
providing 50% tax relief for the first 100,000 seed investment. The exemption
of the investment from capital gains tax has been extended for another year
to cover tax year 2013/14.

the scheme helps to level the playing field for early stage company founders
and does away with onerous terms or having to concern themselves with
over-bearing preference rights.

28

Eileen Burbidge,

Partner, Passion Capital

SEIS and EIS STATS: HM Revenue & Customs has reported a

dramatic rise in the number of small businesses applying for
approval under schemes designed to encourage investment.
In 2012/13, a total of 4,075 companies applied to raise
funds under the Enterprise Investment Scheme (EIS) and
Seed Enterprise Investment Scheme (SEIS), a 90% increase on
the 2,147 applications submitted in the previous year.

29

The Business Bank

The business bank will manage the combined 3.9 billion of Government resources
in order to promote competition and increased supply through new finance
providers as well as increase the provision of finance to viable but underserved
businesses, in particular improving the provision of long term finance.
Entrepreneurs Relief was created to reduce the amount of Capital Gains on
disposal of qualifying business assets, allowing investors to realise more capital
on their investment in start-ups and small companies. It was doubled from
5 million to 10 million, giving business owners a special Capital Gains tax rate
of 10% on their first 10 million.
Share Loss Relief allows investors to offset any losses in shares against their
income, thereby reducing their taxable income.
Investor Visa: announced in November 2010, it aims to encourage
high-net-worth individuals who want to make a substantial venture investment
in start-ups and entrepreneurs to relocate to the UK.
Venture Capital Trusts: encourages
individuals to invest indirectly in a range
of small higher-risk trading companies
whose shares and securities are not
listed on a recognised stock exchange,
by investing through VCTs.
Corporation Tax: the Government
aims for the UK to become the most
competitive tax system in the G20.
Corporation Tax rate was lowered to
23% in April 2013 and will reduce further
to 21% by 2014 and 20% in 2015.
Tax relief for the creative sector:
introduced in April 2013, corporation
tax relief for the animation, high-end
television and videogames industries.

30

Start-Up Loans: Funding the Next Generation

Launched in September 2012, the Start-up Loan Scheme provides
support to individuals to help them start their own business. The
pot received an additional 30million in January 2013, boosting
the total available for Start-Up loans to over 110 million over
the next three years

At publication, almost 51 million has

been loaned to 10,000 Start-Ups.

Business Angel Co-Investment Fund:

the 50 million Business Angel Co-Investment
Fund supports Angel investments into high
growth potential early stage SMEs.
Enterprise Capital Funds: designed to
provide equity investment in early stage
companies with high growth potential but
unable to obtain finance. The Government
provides money for investment funds, but
limits the return taken, making private
investments more profitable in
successful funds.
UK Innovation Investment Fund: is a venture capital fund that aims to
drive economic growth and create highly skilled jobs, by investing in
innovative businesses where there are significant growth opportunities.
Enterprise Finance Guarantee: is a loan guarantee scheme designed
to facilitate additional lending to viable SMEs lacking the security or proven
track record for a commercial loan.
Business Finance Partnership: launched May 2013, its aim is to
increase lending to small and medium sized businesses from sources
other than banks.

31

J From Start-ups
to Scale-ups
High growth companies are one of the
cornerstones of the economy. Barclays recent
Entrepreneurs Index shows that the proportion of high-growth companies
in the UK mid-sized SMEs recording an increase in turnover of at least
33% over the past three years, as well as 10% year on year growth for a
minimum of two of these years has also shown an impressive increase,
from 17.4% in 2011 to 20.5% in 2012. This means that one in five of these
companies can now be defined as high-growth. Increasingly, Government
has introduced new and important measures to create the best environment
necessary to allow these firms to flourish.
Addressing the Funding Gap for High Growth Businesses
One of the challenges facing entrepreneurs and business builders as they
scale-up is the funding gap. The funding environment for early stage in the UK is
quite robust, yet todays digital and tech businesses scale up faster than traditional
industries and often need substantial growth capital at earlier stages. The market
opportunities for digital businesses are global and hard to quantify. Without the
track record of revenues and profitability required to secure later stage investors
or to access the public markets, these firms often turn to US funding sources and
once they secure funding from America, the centre of gravity for the company shifts,
making the US the logical choice for raising capital in the future.
Figures from the BVCA suggest that nearly 700 million was invested in start-ups
and early-stage companies in the UK between 2010 and 2012, and there is
every indication that the annual rate of investment in early stage companies has
increased in 2013. Government has actively supported this through the EIS and
Seed EIS schemes which have attracted large numbers of private investors to this
space, and new innovations such as crowdfunding platforms are further examples
of innovation and increasing the supply of start up risk capital. Yet in the same
period only 329 million was made available to more established companies so
called late-stage venture who require larger sums of capital to enable them to
continue growing and to reach profitability and a sustainable future.

32

We can make a very strong

argument that we are just as good as
Silicon Valley at funding early-stage
companies. Since 2005 nearly 1,200
equity investments have been announced
in early-stage British companies, around
220 every year. In the same time period
it is estimated that around 1,400
investments were made in Silicon Valley.
However, in those same years whilst
over 1,500 more mature Silicon Valley
companies received larger, later-stage
funding, fewer than 400 similar sized
UK companies got the funding they need to continue to grow. That suggests
there is in the region of four times more late-stage funding activity in
Silicon Valley. This has to change.

Stephen Welton,

CEO, Business Growth Fund

The limited supply of this late stage venture capital means that we are not able to fund all the
quality opportunities coming through, meaning that some of the very best new companies are
not able to fulfil their potential or leave our shores to fInd other sources of funding.
With this in mind, the Government has asked the Business Growth Fund (BGF) to bring
together a group of like-minded funders, including banks, to look at structural and sustainable
solutions to the current funding gap. We need to ensure that the escalator from start up
funding through to public markets is working effectively at all stages.
In the two years since they made their first investment, BGF has become the UKs most active
growth capital investor it has already provided 200 million to nearly 40 companies, including
two companies here in Tech City: Unruly Media (a social video distributor) and Workshare
(a provider of cloud-based document collaboration software). The growth capital and
support that BGF provides is the next step after venture capital. Their focus is primarily
profitable companies with a turnover of 5 million to 100 million.
BGF with their capital base and existing regional infrastructure, are keen to become more
directly involved with the financing needs of fast-growing companies and consider how they
might work with others to provide additional firepower within the current funding environment.
This is an essential part of the overall ecosystem that in turn will flow through to public markets.

33

Like so many of the start-ups it plays host to, Tech Citys success can

be measured in the challenges it has created for itself; the challenges faced by
start-ups evolve and change as the business rapidly scales up. Three years
ago, the debate surrounded whether there was indeed a technology cluster in
East London. Such debates appear rather quaint today as businesses and

combined with incentives for seed funding have helped to unleash the dynamic

The High Growth Segment (HGS) is a new segment

of London Stock Exchanges Main Market, designed
to assist mid-sized European and UK companies that
require access to capital and a public platform to
continue their growth.

potential of Londons tech industry.

What type of company can access HGS?

However there is much work to be done. The tech industry is hungry for talent,

Specific eligibility criteria include:

Incorporation in an EEA state;
Equity shares only;
Revenue generating business with historic revenue growth of 20% (CAGR)
over a 3 year period;
Minimum free float of 10% with a value of at least 30 million (majority
of the 30 million must be raised at admission);
A Key Adviser (who must be a UKLA approved Sponsor) to be retained
at admission and for specific matters including notifiable transactions.

policymakers attempt to resolve challenges surrounding the acquisition of

resources such as highly trained talent and growth capital, and the very top
cohort of firms grapple with the merits of an IPO in London or New York. It is
abundantly clear, therefore, that government policies in support of Tech City,

and whilst government policies on education will help to close the talent gap in
the medium term, and efforts by business and government aim to shift cultural
perceptions in the long term, policies on immigration risk strangling a surging
industry in the short term.

Tim Hames,

Director General, British Venture Capital Association

Enhancing the opportunity for High Growth Businesses

Over the last 2 years, changes have been introduced to improve the competitiveness
of UK capital markets. The Government has removed Stamp Duty on AIM shares and
allowed ISAs to be invested in the AIM market companies. The Government has also
worked with the London Stock Exchange to create new offerings uniquely suited to the
capital requirements of high growth digital and tech companies. The new High Growth
Segment offers a reduction in the free float requirement from 25% to 10%. This is
important for entrepreneurs who want to raise long term capital but maintain
management control over their businesses and aligns with equity requirements on
Nasdaq and NYSE.
Looking forward, the Association of British Insurers (ABI ) is leading discussions with
investors, investment banks, lawyers and the Financial Conduct Authority (FCA) to
further improve the competitiveness and efficiency of the UK as a listing destination
while reassuring retail and institutional investors of appropriate compliance and rigour.
Areas of discussion have included: earlier publication of the prospectus, increased
availability of independent research and reduction of the research blackout period
which could ultimately lead to improving investor education and the shortening of
IPO timeframe. The government continues to encourage this dialogue to increase
the competitiveness of UK exchanges.

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IN FOCUS:
HIGH GROWTH SEGMENT

Ensuring that the UKs fastest growing and most dynamic companies

have access to equity capital is a priority for London Stock Exchange. The
High Growth Segment provides an additional attractive choice, giving these

companies a launch pad for further success and facilitate their transition
from private to public company life.

Alexander Justham,

CEO, London Stock Exchange plc

FTSEs UK Digital Services Index

Launched on 6 December 2013, the Digital Service Index will benchmark UK
companies both large and small operating in the digital sector.
The launch of the index series reflects the growing importance of the digital sector
to UK businesses. It comprises not just software and technology stocks, but provides
a true picture of the great breadth of industries in the UK that the internet has
revolutionised. A company is eligible for the index if it derives over half of its revenues
from either digital or online services, or if it is considered to be engaged in providing
services that are integral and critical for the functioning of digital services.

35

The FUTURE FIFTY

The Future Fifty is a high growth acceleration programme to help
the most promising businesses reach their full potential.
Announced by TechCity UK in April 2013 with the support of the Chancellor of
the Exchequer, Future Fifty builds on reforms introduced by the London Stock
Exchange and the Government to further cement the UKs position as the
worlds best destination for high-growth businesses.
An independent Advisory Panel working on behalf of by TechCity UK
selected fifty exciting and innovative high-growth companies into the
programme between October and December 2013:

London is one of the most exciting and energetic places in the world to

build a company, specifically in the fashion technology space where we lead

in innovation. The Future Fifty is simply an invaluable support network that
understands these challenges. All the great effort that Tech City UK has put
in to make those practical and tricky conditions as easy as possible means
our team can get on with building a world-class product and company.

Chris Morton,

Co-Founder and CEO, LYST

A Future Fifty Company

ACHICA, Acturis, ao.com, Box, Calastone, Chemist Direct, Datasift,

eCommera, eToro, Farfetch, Funding Circle, Global Personals, graze, Green
Man Gaming, Hailo, Horizon Discovery, HouseTrip, Huddle, Just-Eat,
Lumimobile, Lyst, MADE.com, Masternaut, Matchesfashion.com,
MedicAnimal, Mimecast, Mind Candy, MODE, Moo.com, MyOptique,
Naked Wines, Neomobile, Nomad Digital, NotOnTheHighStreet,
Omnifone, OneFineStay, Photobox, Repknight, Secret Escapes,
SecretSales, Shazam, Skimlinks, Skyscanner, Small World Financial
Services, Swiftkey, Synthesio, Unruly, Worldstores, Zoopla, Zopa.
Now part of the Future Fifty programme, these companies have access to a
broad range of support and services, accessible via a single point of contact
within the Future Fifty team. This concierge-style support includes: strategic
advisory, educational workshops delivered by partners from the private sector,
bespoke events focused on increasing engagement with institutional investors
as well as a continuous programme of press and promotional backing of the
cohort. All the content accessible through the programme is built around needs
identified in consultation with each company.
These fifty companies are already driving economic growth and creating jobs
across a range of sectors. With this tremendous package of support from the
public and private sector built around their individual needs, the programme
aims to help them continue to scale rapidly and lay the foundations for their
next major liquidity event.

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37

The launch of the G-Cloud service is one such

example of how government procurement has been
made more accessible to businesses of all sizes.
Since the G-Clouds CloudStore was launched in
February 2012, sales have exceeded 50million
and 58% of these sales have gone to SMEs.

In order to deliver excellent digital public services we need innovation,

rapid reaction and a can-do attitude from our suppliers exactly what small
British companies excel at. Were using innovative devices like the dynamic
G-Cloud and the Digital Services Frameworks to reduce the barriers to entry
for government procurement. We want to engage with the best companies in
a truly open market. And were getting there; were doing more than 50% of

Opening Up
Government
Procurement
With over 230 billion per year spent on goods and
services across the public sector, Government has
been working to ensure that UK SMEs can compete
for and win new business, ensuring it can support
growing firms. Government has set a target to ensure
that that 25% of its spend, either directly or in supply
chains, goes to SMEs by 2015.

38

new business with SMEs. So if youve always thought selling to government

was too bureaucratic, think again. Were open for business.

Liam Maxwell,
Chief Technology Officer, HM Government

Initiatives like G-Cloud are having a big impact in giving innovative

SMEs with disruptive digital technologies the chance to showcase their work
and enter procurement processes alongside big incumbent players. Here at
BookingBug were certainly seeing the channels to delivering sizable
government projects open up and are in discussions with several different
departments about various projects. Thats something that seemed almost
impossible just a couple of years ago.

Glenn Shoosmith,
CEO, Booking Bug

39

Rewarding
Innovation

The Patent Box came into effect

in April 2013, reducing Tax to 10%
on the earnings from intellectual
property developed in the UK.
This preserves capital for
reinvestment and growth for
start-up tech companies.

Over the last three years, the Government has

supported innovation, research and development
through changes to the intellectual property
framework and directly or indirectly funding
innovative new products.
To explore how the intellectual property framework could support economic
growth and innovation, the Prime Minister commissioned the Hargreaves
Review in 2010. The review made 10 key recommendations and the
government has accepted each of them. In doing so, the UK economy
is expected to experience potential growth of up to 7.9 billion.

The UK Governments endorsement of the recommendations made by

the Hargreaves Report represents a positive step in reducing the uncertainty

around copyright issues for digital start-ups like Mendeley. It is crucial to ensure
that copyright law reflects the needs of researchers and academics so that they
can get the most from materials which they have legal access to, and share the
benefits of that knowledge with the wider society and economy.

R&D Tax Credits

In April 2012, the rate of Research and Development (R&D) Tax Credit
for companies with fewer than 500 employees increased to 225%.
This means that companies carrying out research or development
work in technology are entitled to tax credits, paid as a cash sum.
Many small firms have been benefitting from these tax credits and
using them to increase cash flow and to hire new staff which
contributes to the innovation cycle.

Between tax years 2008-2009 and 2011-2012,

HMRC has seen a 49% increase in the uptake of
R&D tax credit claims.

Dr. Victor Henning,

CEO, Mendeley

R&D Tax Credits are hugely valuable to start-ups like AMEE,

providing valuable cash flow, and giving both an incentive and

confidence to invest in innovation.

40

Gavin Starks,
Founder, AMEE

41

THE TECHNOLOGY STRATEGY

BOARD AND TECH CITY
The Technology Strategy Board the UKs innovation agency pioneered the
Launchpad concept in Tech City in 2011 because it was seen as a credible
cluster to test out the new idea. The Launchpad aimed to help develop and
strengthen a cluster of high-tech SMEs: in Tech Citys case, digital businesses.
Small, young businesses were invited to pitch for 100,000 of investment
funding. This could only be accessed if they were able to attract match funding
through other sources of finance. Given the number and quality of the proposals,
the Technology Strategy Board doubled the overall funding for the competition
from 1 million to 2 million.
Our selection process was designed to be easy and compelling: all applicants
were asked to submit a two-minute video, then those short-listed were asked
for a business plan. Sixteen businesses were offered funding and given 12
months to find the additional funding necessary to access the grant. In the
end, 13 of the projects went forward, including companies that now reach out
to international markets. The clothing app Snap Fashion takes smart phone
users from the pages of a fashion magazine to the high street in just one click;
the revolutionary keyboard designs of ROLI have
been adopted by leading composers and musicians worldwide, while the
artisan furniture business of UntoThisLast has developed user-friendly
software for the local economy.

Open Data: In October 2013, Government published a report entitled Seizing the
Data Opportunity where it highlighted the potential impacts of big data on the economy.
The UKs open data infrastructure is world-leading with over 10,000 public data sets
published on data.gov.uk. Government also part funded the Open Data Institute which
leads the world in its thought leadership and business incubation practices.

The Open Data Institute

The Open Data Institute, based in the heart of Tech City, is the first of its kind in the
world. Founded by Sir Tim Berners-Lee and Professor Nigel Shadbolt, the ODI is an
independent, non-profit, non-partisan, limited by guarantee company.
The ODI has secured 10 million over five years from the UK Government
(via the UK innovation agency, the Technology Strategy Board), and $750,000
from Omidyar Network, and is working towards long-term sustainability through
match funding and direct revenue.
After the phenomenal success of its first year, the ODI announced the creation of
13 ODI Nodes around the world. The Nodes bring together companies, universities
and NGOs that support open data projects and communities.

I have been amazed at the energy and enthusiasm of people looking to align around

a global network of ODIs. The speed at which we have been able to collaborate, and the
shared thinking about the approach and the scale of the potential, indicate that the ODI is
an idea whose time has come. We have borrowed from the design principles of the web
itself to bring people and organisations together, and will use open data both to collaborate

The Technology Strategy Board uses a range of programmes and tools to

encourage innovation and economic growth across the UK. The Launchpad
concept has proved an extremely effective way to support SMEs and build
technology-focussed networks in specific locations.

with each other, and as the primary output of the network.

This year alone, the Technology Strategy Board has allocated 5 million to
clusters in: manufacturing (Daresbury), satellite applications (Harwell), digital
technologies (Glasgow), motorsports (South Midlands), creative and digital
(Manchester) and cyber security (Severn Valley). Other locations (and technologies)
are currently under consideration as the programme moves forward.

Successful projects from the Tech City Launchpad:

UntoThisLast, Brightsouk, Rimota, Snap Fashion, FrameBlast, Seaboard,
Somethinelse, Padify, Unit9, Funding options, Makielab, Artistic.ly,
Passwords Made Simple.

Gavin Starks,

CEO, The Open Data Institute

The Open Data Institute the first organisation of its kind grew out of our belief in

the power of open data to foster innovation, drive economic growth and create prosperity.
The fact that only one year on, cities and countries around the world want to adopt the
ODI model, is evidence of how quickly the open data revolution is spreading. The
establishment of ODI Nodes in UK cities will help embed an open data culture in

communities, and bring the economic benefits of new and innovative data-led
businesses that will help the UK compete in the global race.

Francis Maude,

Minister for the Cabinet Office

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43

Case Study:

INFRASTRUCTURE:
COMMUNICATIONS
AND TRAINS
Government Investment in 4G
Delivering 4G services is a key part of the Governments commitment to
providing the UK with the digital infrastructure businesses need to succeed
and grow. The Government is investing 830 million to provide the UK with
the best superfast broadband network in Europe by 2015 as well as
extending mobile coverage.

Broadband
Super Connected Cities: In 2011, the government set aside 100 million for
an Urban Broadband Fund (UBF) that will create up to ten super-connected
cities across the UK. This was followed in 2012 by a further fund of
50 million for a second wave of cities to benefit from this programme.
The super-connected cities will benefit from faster and better broadband,
and large areas of public wireless internet (wifi) access.

A FLAGSHIP PARTNERSHIP:
EE and Tech City UK
EE is the UKs largest communications company and the pioneers of 4G in Britain. The
company formally began its relationship with Tech City UK in May 2013. The two organisations
developed a shared ambition and vision, namely to use technology and innovation to help
make Tech City the worlds largest and most successful centre for start-up businesses.
To do that, EE is building out the worlds most advanced mobile communications infrastructure
across the area including the worlds first and only 300Mbps 4G service.
In the six months that the two organisations have been working together, EE has already
invested over 3.5m in improving the mobile infrastructure in the area. It means that
businesses in East London can now get faster mobile internet speeds, enabling them
to do more, deliver more, create more and connect more.
EE is also supporting major business initiatives in the area such as Boxpark, the independent
pop-up retail space, with the company supplying superfast 4G to all of the 20 retail units in
2014, enabling a cashless and technology-focused experience that heralds the future of retail.
EE has committed to prioritising Tech City for all future networking innovations, meaning that
businesses in the area will be able to stay one-step ahead of their global rivals.
As well as delivering a bigger, better, faster mobile infrastructure in the region, EE is
also supporting businesses with bespoke Tech City offers and mentoring.
The company has developed tailored Tech City packages for local businesses, giving
companies more airtime, data access and devices at the best value. Tech City companies get
privileged access to these packages, giving them the best possible start for their business.
EE has also developed a mentoring scheme EE Experts - which gives Tech Citys small
businesses and start-ups exclusive access to the some of the smartest minds in the telecoms
industry. The programme matches up experts from EEs legal, marketing, finance, technology
and HR departments, with small Tech City-based businesses that need support or advice
within that specific discipline.
In 2014, EE is also planning to build the EE Space a co-working environment that will
enable small businesses to work, network, learn and thrive with like-minded individuals.
The company is also planning to begin a privileged Tech City developer programme,
opening up its APIs to encourage the faster, more dynamic creation of next generation
mobile services for 4G and beyond.
EE is also looking to expand its Tech City partnership to Tech clusters nationwide, giving
small businesses and start ups across the country the opportunity to dream, develop and
deliver in bigger and better ways than ever before.

44

45

O2
02, the fastest growing wifi operator
in the UK has 3,000 cell sites
covering over 7m people in London.
02 also has over 1800 wifi hotspots
across the capital with over
2.83 million registered users.

BT
In the period since Tech City project was announced, BT Group has been
deploying fibre broadband across the UK. The technology is now available at
over 2.6 million premises in London, and will reach over 3.1 million premises
by next Spring. Our research shows this investment should help create
26,000 new jobs and result in 6,600 new start-ups
The new BT Infinity Lab in Tech City is helping start-ups to develop
new applications and services that exploit fibre broadband. Were also
demonstrating G.Fast technology, which can potentially deliver speeds
of up to 1 Gigabit, at the Infinity Lab to help developers allow for future
advances too. And BT Sport, arguably the largest start-up in Tech City, has
the UKs biggest and most technologically advanced TV studio, broadcasting
since August 2013 from its new HQ in the emerging cluster in iCity on the
Queen Elizabeth Olympic Park in Hackney. BT Sport is the first tenant of
iCity and had created 300 new jobs on the site so far.

Looking to the Future-Connecting

Knowledge Clusters
The triangle of London Cambridge Oxford is the UKs kernel of cutting edge,
high-tech industry developments. Government is determined to support this
ongoing focus of economic development within the UK economy.
Beyond these central clusters, we are also enhancing and expanding connections
to other high tech hubs across the UK, as well as a range of international
gateways. This plan articulates the Governments commitment to a national
tech community, linked by a modern and growing rail network.
Stations play a key role as gateways to the rail network. Major redevelopment of
Farringdon, Reading and Birmingham New Street stations is nearing completion.
Proposals for the full-scale redevelopment of Oxford station are progressing
rapidly, so too are plans for a new station at Cambridges Science Park.
Farringdon will become a major transport interchange, served by Thameslink,
Crossrail and London Underground. It will enjoy fast and frequent connections
to Heathrow, Gatwick and Luton airports, as well as Brighton, Cambridge,
Stratford and Canary Wharf. As well as a rapidly developing tech destination in its
own right, Stratford is an expanding transport hub, with connections to tube lines,
High Speed 1 and Crossrail. As soon as 2017, we aim to deliver new infrastructure
which will facilitate the introduction of direct connections with Cambridge and the
proposed Science Park station.
A partnership has also been agreed between Central Working and Brookgate to
develop a members lounge and co-working space on Station Road, Cambridge
further cementing the relationship between the tech clusters in Cambridge and
London. Central Working runs a well established co-working space in Tech City.

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47

Londons
co-working
spaces and
accelerators

When I visited London in September 2012, it was very clear that something

had changed in the last couple of years. It just felt different. Better. Places like
Campus were teeming with start-ups that were thinking big. Big companies were
starting to help the little companies.

The Governments support had helped attract more talent and provided
visibility to what was happening in London.

David Cohen,

Founder and CEO, TechStars &

Jon Bradford,

Managing Director, TechStars London

In three short years, Londons technology sector

has experienced tremendous growth. Co-working
spaces and accelerators have appeared all across
the Capital, thousands of start-ups have formed,
tens of thousands of jobs have been created, a
dense ecosystem of startups and entrepreneurs has
emerged and the overall economic impact has been
felt across the city and across other sectors.

Today London boasts over

30 co-working and accelerator spaces.
48

49

50

Google Campus

The Barclays Accelerator

Google Campus came about after David Cameron met

Eric Schmidt and encouraged him to invest in Tech City.
It was opened by George Osborne in April 2012.
In the last 12 months, Campus has helped create 576
jobs among the start-ups in its first year.
Campus has helped start-ups raise over 34M (in the
12 months to October 2013).
Campus is also helping the UK to attract foreign
investment with 100,000 visitors and 21,000 members
from over 60 different countries in 2013.
Over 1,100 start-up/entrepreneurship events have been hosted at Campus in
2013. This conservatively means that 100,000 people came through the doors
of Campus in 2013.
A recent report by the Kauffman foundation shows that entrepreneurship is
contagious and that people are more likely to become entrepreneurs if they
know an entrepreneur.
This means that Campus will have a huge network effect beyond the walls
of this building.
Mentorship In 2013 Campus will complete 1,000 mentorship sessions
between entrepreneurs and Google employees this is the largest corporate
effort provide mentorship to startups in London.
Diversity A programme called Campus for Mums was launched to help
mothers in maternity leave launch their startups by providing mentorship and
support over an 8 week program. The feedback has been fantastic and two
businesses have already launched closing the gender gap is hugely important
and Campus is already showing much higher participation of women than the
industry average for tech.
Inspirational speakers and role models have come to Campus. These events
have given entrepreneurs a chance to engage with thought leaders such as
Eric Schmidt, Guy Kawasaki, Jimmy Wales, and many more.

The Barclays Accelerator, run by Techstars, is a multi-year, intensive start-up

programme designed to support new businesses on their journey to delivering
breakthrough innovations, the first of its kind in the financial services sector. Initially
companies will need to pitch their ideas that will really make banking better for
consumers, before a shortlist of ten is selected for a place on the prestigious
accelerator programme. The ten companies will be mentored by executives
from Barclays, including Darryl West, Barclays CTO and Derek White, Barclays
Chief Design Officer, alongside mentors from Techstars, including Jon Bradford,
Managing Director of Techstars in London and David Cohen, founder and
CEO of Techstars.
Each company accepted into the Barclays Accelerator will
receive a 12,500 ($20,000 USD) investment from Techstars
and a 62,500 ($100,000 USD) convertible note. The ten
companies will go through the Techstars process of
mentorship, company build-out and business model
refinement, culminating in an investor Demo Day in London.

White Bear Yard

White Bear Yard was the first tech start-up coworking space
in East London (Tech City) established in July 2009. Started on one floor with 2,000
sq ft and teams were RjDj and WeDo, then expanded in October 2009 to another
floor adding a further 5,000 sq ft and teams Smarkets, Timetric, Picklive, etc.
Mendeley moved into a third/further floor in December of that year.
A number of successful acquisitions/exits have come out of White Beard Yard
including, Timetric acquired by Progressive Media (2011), Rapportive acquired by
LinkedIn (2012), Mendeley acquired by Reed Elsevier (April 2013) and mopub
acquired by Twitter (September 2013).
In addition, notable US companies establishing EMEA HQ at White Beard Yard
include, Twilio ($104 million raised from VCs to date), General Assembly
($14 million raised from VCs to date), Stripe ($40 million raised from VCs to date),
RolePoint (fundraising not publicly disclosed), BuzzFeed ($46 million raised from
VCs to date).

51

TechHub

Tech London Advocates

TechHub represents over 1000 members who have collectively raised over
100 million. Companies based at TechHub range from single founders to
30-person start-ups. The community created around these businesses
has meant that larger teams are now proactively mentoring younger companies.

Tech London Advocates was launched in April 2013 and founded by former VP of
Skype, angel investor and member of Tech City Advisory Group, Russ Shaw. It is
a a private sector led coalition of expert senior leaders from the tech sector and
broader community who have committed to championing Londons potential
as a world-class hub for tech and digital businesses and to support its start-ups
in finding new investment, new talent and achieving high-growth.

TechHub now has two sites in Londons Shoreditch, one at TechHub @ Campus,
in partnership with Google, and one for larger teams, and are set to open in the
Olympic Park in 2014 as a major partner in iCITY as well as enjoying a large R&D
partnership with BT. TechHub has also opened in Riga, Manchester, Bucharest
and Swansea with Bangalore and other as-yet unannounced cities to follow next
year, taking TechHub beyond Europe. Its this move towards globally connecting,
not just start-ups, but the tech start-up ecosystem thats important for the growth
of the industry as a whole.

The Trampery
2013 has been a year of rapid expansion for The Trampery with two new buildings
opening, an 800% increase in total floor area and The Tramperys communitybased incubator model brought to completely new sectors. The Trampery London
Fields opened in July as Londons first incubator for growth-stage fashion labels.
The 20,000 square foot building has been refurbished with The Tramperys
acclaimed style to provide light-filled studios which are now home to some of Londons
fastest-growing labels including Holly Fulton, James Long and Lou Dalton. The
buildings 2,000 square foot Morley Hall provides East Londons most spectacular
venue with its coffered oak ceiling dating from 1880. The project, developed in
partnership with the London College of Fashion and Hackney Community College,
was officially opened by HRH the Duke of York, Patron of The Trampery.
Meanwhile Mother at The Trampery is a 7,000 square foot warehouse on St John
Street, Clerkenwell, which opened in May as a partnership with communications
agency Mother. Its mission is to foster a community combining talented innovation
businesses from disparate sectors alongside senior figures from large corporations
including Unilever, Diageo, Microsoft and Coca Cola. In August The Trampery also
produced Hack the Barbican, a month-long partnership with the Barbican Centre
which brought together more than 100 projects at the intersection of arts,
technology and entrepreneurship.

52

Tech London Advocates has gathered more than four hundred senior leaders
who have agreed to come together to help promote London as a technology hub.
With an emphasis on the symbiotic relationship between big business and small,
Tech London Advocates has formed a number of Working Groups which are
working to address a variety of the challenges which the tech sector is facing.
These particular focuses include: Women in Tech; Talent and Immigration;
Education; and Capital and Investment.

Warner Yard
Founded in 2013 by Playfair Capital, Warner Yard houses an exciting mix of start-ups,
investors and innovators. The Clerkenwell space has been designed to create an
environment where young companies can execute and grow. Warner Yard residents
include: a series of investors and start-ups such as Duedil, Planvine, RummbleLabs
and Taskfirm. Warner Yard was also the first London home for Tech Stars.

Seedcamp
London-based Seedcamp is the most connected international seed investor in
the world and is Europes leading micro-seed investment and mentoring program.
Since launching in 2007, Seedcamp has received over 9,000 applications from
70 countries. With a wide network of mentors, Seedcamp has held over 13,000
mentoring sessions for the benefit of over 900 startups.
Seedcamp has ultimately invested in over 100 of Europes most promising
startups. Attracting over 360 investors into these startups, 83% of Seedcamp
portfolio companies have gone on to raise funding, totaling over $130million.
Seedcamp portfolio companies have created over 850 jobs in the process.

53

Collectively, this group has identified five principal areas as the focus of its
work going forward into 2014. These include:
Enhancing and celebrating the culture around technology and entrepreneurship;
Nurturing the skills relevant to the digital economy;
Supporting high growth businesses by creating the right environment;
Commercialising research and great ideas;
Retaining IP and jobs within the UK.
Tech City UK and the UK Tech and Business Alliance was delighted to contribute to the
Governments Information Economy Strategy launched in June 2013. We will continue to
share insight and opportunities with the Information Economy Council as we collectively
work together to address challenges, remove barriers and catalyse growth in the sector.

Technology clusters are emerging throughout the country and many

of the challenges we face are common to us all, such as access to skills,

capital, public and private sector markets. The Cluster Alliance is helping

Tech City
the Future:
Tech City has become Europes digital capital a global
centre that demonstrates whats possible when passion,
people and policy come together to support a common
goal. And this is only the beginning.
An Alliance for the Future
Its vital that government stays in step with the pace of innovation and digital disruption
and continues to listen to the challenges faced by young and growing businesses
not just in Tech City but all across the UK.
In April 2013, Tech City UK reached out to established and emerging tech clusters across
the UK and formed the UK Tech and Business Cluster Alliance. The alliance represents
13 established and emerging technology clusters from across the UK with the aim to:
share knowledge and best practices; communicate opportunities and information that
will benefit the technology businesses within each cluster; gather input and feedback
from each business community and feed this into government.

54

us to learn from each other and find common solutions.

Edward Benthall,
Chair, Cambridge Enterprise
In looking to the future, Tech City UK will continue to take cues and guidance from
the entrepreneurs and innovators. This has been at the heart of what has made
Tech City what it is today. We will carry on working with the Tech City community and
our partners and stakeholders to promote the UK as the best place to imagine, start
and grow a technology business. We will also continue to champion innovation and
entrepreneurship as well as increase our focus on creating the best environment for
companies to scale and grow through programmes like the Future Fifty and the
Cluster Alliance. By continuing to have this dialogue, we can ensure a bright future
with possibilities that are limited only by our imagination.

I hope that people see whats happening here and understand that

you can have an impact on culture, create your own jobs, create your own
businesses. We should be inspiring and enabling people to do that, students
especially. [Tech City] is where they can come. We can support that, we have
a community here now that can support that.

Matt Webb,

Founder and CEO, BERG

55

Appendix

56

57

About Our Data Partner

Employment data in this report was provided by CareerBuilder in conjunction

with Economic Modeling Specialists Intl. (EMSI), a CareerBuilder company
specializing in labor market analysis. As the global leader in human capital
solutions, CareerBuilder works with the worlds top employers, providing
everything from labor market intelligence to talent management software
and other recruitment solutions. Owned by Gannett Co., Inc. (NYSE:GCI),
Tribune Company and The McClatchy Company (NYSE:MNI), CareerBuilder
and its subsidiaries operate in the United States, Europe, South America,
Canada and Asia. For more information, visit www.careerbuilder.co.uk

58

59

European
Internet:
UK Leading
the Way

European Ad Spend
Mobile
6%

United Kingdom

Other
8%

Search
38%

Classified
17%

Video
5%

Barclays new research on the European

internet landscape demonstrates that the
UK is a global leader in the digital economy.

Rich
Media
10%

2012 Online Ad Spend: $1.1bn

Online as % of Total Ad: 20.7%

Denmark

Germany

2012 Online Ad Spend: $0.8bn

Online as % of Total Ad: 28.0%

2012 Online Ad Spend: $6.1bn

Online as % of Total Ad: 19.8%

Norway

France

Display
16%

Netherlands

Spain

2012 Online Ad Spend: $1.6bn

Online as % of Total Ad: 22.3%

Total B2C
eCommerce Sales

$52.5

Germany

$35.5

France

$32.0
$6.8

Netherlands

37.3
30.6

Poland

29.3

Finland

27.8

France

27.3

Norway

24.6

Germany

24.6

Spain

23.8

Belgium

22.4

Sweden

22.0

$6.1

Italy

$5.2

Spain

$5.2

Switzerland

$3.5

Sweden

$3.3

Czech Republic

$2.2
$0

% of Total
Retail Online

$20

$40

United Kingdom
Poland

6.8%

20.6

Germany

Denmark

20.6

Czech Republic

6.0%

France

6.0%

19.5

Italy

18.5

Switzerland
Austria

5.0%

Sweden

14.4
14

6.6%

Netherlands

16.5
28

42

$60

11.3%

Portugal
Ireland

2012 Online Ad Spend: $1.2bn

Online as % of Total Ad: NA

United Kingdom

Poland

Netherlands

2012 Online Ad Spend: $3.7bn

Online as % of Total Ad: 15.6%

European eCommerce Landscape

Average User Hours Online Per Month

4.5%

Switzerland

3.6%

Spain

1.9%

Italy

1.4%
$0

60

2012 Online Ad Spend: $8.8bn

Online as % of Total Ad: 28.7%

2012 Online Ad Spend: $0.8bn

Online as % of Total Ad: 25.3%

($ in billions)

United Kingdom

Sweden

$0

$0

$0

61

DEFINITIONS AND
METHODOLOGY
In defining the tech/media/digital industry we took two different approaches.
The first approach was to use the Standard Industrial Classification (SIC) codes
to identify the industry. The second was to use the Standard Occupational
Classification (SOC) system to identify the occupations.
Data presented for the selected industries and occupations is based on
EMSI information, sourced from the following:
Business Register Employment Survey (BRES)
Workforce Jobs Series (WJS)
Annual Survey of Hours and Earnings (ASHE)
Labour Force Survey (LFS)
Annual Population Survey (APS)
Working Futures (WF)
Mid-Year Population Estimates
Subnational Population Projections
Annual Business Inquiry (ABI)
Industries
Traditional technology, IT, media, and communications industries
have been selected for the analysis because they demonstrate
higher levels of digitization than other industries. When we refer
to employment by industry, we are accounting for any employee
of a company classified within this industry.
Our analysis suggests that between 2009 and 2012, the number of jobs in the
tech/digital sector in London grew by 16.6% going from 499,000 to 582,000.
Between 2009-2012 there were 303,000 jobs created in London across all industries. Of these, 83,000 have come from the tech/digital sector, representing 27%
of the total net job growth in London.
We calculated growth in the number of jobs in the tech/digital sector as defined by
the Standard Industry Codes outlined below.

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SIC Description
1813 Pre-press and pre-media services
1820 Reproduction of recorded media
4651 Wholesale of computers, computer peripheral equipment and software
4791 Retail sale via mail order houses or via Internet
5813 Publishing of newspapers
5821 Publishing of computer games
5829 Other software publishing
5911 Motion picture, video and television programme production activities
5912 Motion picture, video and television programme post-production activities
5913 Motion picture, video and television programme distribution activities
5920 Sound recording and music publishing activities
6010 Radio broadcasting
6020 Television programming and broadcasting activities
6110 Wired telecommunications activities
6120 Wireless telecommunications activities
6130 Satellite telecommunications activities
6190 Other telecommunications activities
6201 Computer programming activities
6202 Computer consultancy activities
6203 Computer facilities management activities
6209 Other information technology and computer service activities
6311 Data processing, hosting and related activities
6312 Web portals
6391 News agency activities
6399 Other information service activities n.e.c.
7021 Public relations and communication activities
7111 Architectural activities
7112 Engineering activities and related technical consultancy
7120 Technical testing and analysis
7311 Advertising agencies
7312 Media representation
7320 Market research and public opinion polling
7410 Specialised design activities
7490 Other professional, scientific and technical activities n.e.c.
8299 Other business support service activities n.e.c.
9511 Repair of computers and peripheral equipment
9512 Repair of communication equipment
9521 Repair of consumer electronics

63

As a result of the growing emergence of digital finance companies, or FinTech,

we have also considered financial institutions as part of the tech/media/digital
industry (SIC 64, 66 and 7010 below). However, considering all the jobs in
FinTech, which is the same methodology used for the other industries, could
jeopardize the soundness of the analysis given the magnitude of the sector.
To consider the sector in the analysis whilst ensuring the soundness of the numbers,
we opted for considering only the estimated number of Tech/Digital/Media
professionals working in the Finance sector. The same approach was adopted
for the Activities of Head Offices industry.

Occupations
An alternative approach to looking at growth and employment within the
tech/media/digital industry is to examine the growth in the number of
technical or digitally enabled occupations. Using SOC this approach
takes into account the number of technical or digitally enabled jobs,
regardless of industry.

The list of 4-digit codes considered for FinTech

and Head Offices is the following:

Tech/Digital occupations are defined by a selection of Standard

Occupation Codes (SOC).

6411 Central banking

6419 Other monetary intermediation
6420 Activities of holding companies
6430 Trusts, funds and similar financial entities
6491 Financial leasing
6492 Other credit granting
6499 Other financial service activities, except insurance
and pension funding, n.e.c.
6611 Administration of financial markets
6612 Security and commodity contracts brokerage

Below are the SOCs used in the analysis:

6619 Other activities auxiliary to financial services, except insurance

and pension funding
6621 Risk and damage evaluation
6622 Activities of insurance agents and brokers
6629 Other activities auxiliary to insurance and pension funding
6630 Fund management activities
7010 Activities of head offices
To determine which proportion of the workforce in the Finance industry relates to
Tech professionals, we used the most current occupational data available, which
is a mixture of 2012 real figures and projections. We concluded that this proportion
ranged from 9 to 15% (depending on the 4-digit SIC). We then applied these
percentages to the total number of jobs in Financial industries to determine the
appropriate proportion to consider in the analysis.

64

Our research suggests that between 2009 and 2012, the number of
tech/digital occupations grew from 381,000 jobs to 438,000 across all
industries. representing an increase of 15%.

SOC Name
1134 Advertising and public relations managers
1136 Information and communication technology managers
1137 Research and development managers
2123 Electrical engineers
2124 Electronics engineers
2126 Design and development engineers
2127 Production and process engineers
2131 IT strategy and planning professionals
2132 Software professionals
3122 Draughtspersons
3131 IT operations technicians
3132 IT user support technicians
3421 Graphic designers
3432 Broadcasting associate professionals
3433 Public relations officers
3434 Photographers and audio-visual equipment operators
4136 Database assistants/clerks
4142 Communication operators
5242 Telecommunications engineers
5245 Computer engineers, installation and maintenance
Data on earnings is primarily based on the Annual Survey of Hours
and Earnings (ASHE). Figures from this survey include average annual
industry earnings per worker, which then EMSI expands using Annual
Business Inquiry (ABI) employment costs by industry.

65

Geographic Definitions
Geographic Definitions are based on the NUTS (Nomenclature of
Territorial Units for Statistics) geocode standard for referencing the
subdivisions of countries for statistical purposes. The standard is
developed and regulated by the European Union.
We provide data reporting on the following geographies:
Great Britain: England, Scotland and Wales (note, does not include
Northern Ireland)
England: All of England
Greater East London: a combination of UKI12 & UKI21
East Inner London: UKI12
East and North East Outer London: UKI21
Tech City: Islington, Hackney, Tower Hamlets and Newham
Location Quotient
Location quotients (LQ) are ratios that compare the concentration of a
resource or activity in a defined area to the concentration of that same
resource or activity in a larger area. Industry LQs are calculated by
comparing the industrys share of regional employment with its share
of national employment. In this report, LQs are used to compare the
Tech/Digital/Media employment level in London to that of Great Britain.

Earnings
Data on earnings is primarily based on the Annual Survey of Hours
and Earnings (ASHE). Figures from this survey include average annual
industry earnings per worker, which then EMSI expands using Annual
Business Inquiry (ABI) employment costs by industry.
Company Information
Figures cited in this report have been calculated using the FAME
database which uses Companies House information. We used 38
Standard Industrial Classification (SIC) codes covering technology, IT,
media and communications industries then identified the numbers of
companies based on these classifications. We used the Greater
London geographic definition based on the NUTS geocode.
FAME is a database containing detailed information on over 2 million
UK and Irish companies. This includes 10-year financial history, trade
descriptions, plus details of directors and shareholders. Data is
sourced from documents filed at Companies House, via a direct feed,
and goes through a data control process, which harmonises data into
a standarised format, for easier cross comparison across geographies
and sectors. Primary research is also used to verify company contacts
and to enrich the description of each business.

Jobs Multiplier
A Job Multiplier is a number showing how changes in jobs in one industry
will propagate to other industries in a regional economy. For example,
a jobs multiplier of 3 means that an addition of 100 jobs in an industry
would lead to a total change of 300 jobs (3 x 100 = 300) in the whole
economy. Note that this 300 includes the original 100 jobs, meaning the
additional change is 200. The original jobs can be called the direct
effect, while the additional jobs would be called indirect effects.

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67