10 reasons why London is the European capital of the tech world
London boasts the right environment in terms of skills, innovation and entrepreneurship in order to encourage the flourishing of its tech sector. With a growing number of tech firms choosing to set up shop in East London, it is not at all surprising that this area near Old Street has come to be known as the “Silicon Roundabout”, alluding to its Californian competitor. Here are ten reasons for London’s success:
#1. Tech sector: major contributor to the strong British economy
UK has a much more positive economic outlook compared to the rest of Europe. Healthy economy gives confidence to entrepreneurs that their projects will flourish because of market’s liquidity and, hence, their customers’ ability to afford their goods and services. It also encourages investors as they see a credible potential for the return on their investment. London, in particular, is the leading contributor to these positive economic indicators with technology sector doing particularly well. KPMG report from 2013 showed that the technology sector has outpaced job creation in other sectors for four consecutive years. “London: Digital City on the Rise”, published in June 2014, estimates that London has the highest number of employees in the world in the FinTech sector, even outperforming the Silicon Valley, and that since 2009, tech jobs represented 30% of all job gains in London.
#2. Availability of capital
Ernst and Young Attractiveness Survey for 2015 shows that London remains the top destination for Foreign Direct Investment (FDI) in Europe, with software sector leading at 34% of the total. Mark Gregory, UK Chief Economist at EY commented: “In the eyes of international investors, London is a truly world-class magnet for technology investment. Fostering innovation and the capital’s growing reputation for R&D investment appears to reflect the electrifying impact of the fast-growing tech sector. There is now a growing belief that next global tech giant will come from London.” Tech companies see investment in their sector grow year on year which can be clearly seen on the diagram. First 6 months of 2015 have seen more than 80% of all London’s venture capital injected into the Tech sector, with FinTech companies being the leading investees.
(08 Jul 2015, Tech City UK)
#3. Access to markets
Geographically, London is set up perfectly with access to both American and Asian markets during the day and as a Member of the European Union, UK is the perfect gateway to the European markets. UK’s prevalence over its European counterparts includes good trading relationships with the Commonwealth countries which give businesses an even easier and greater access to the global market.
#4. UK’s fiscal policy
Comparatively low corporation tax, currently, lowest for the G7 countries and plans to reduce it even further in the future, and availability of tax rebates creates a hospitable environment for entrepreneurs, as well as, an attractive destination for investors.
#5. UK’s Immigration policy
Even though tackling the soaring number of net immigrants is on the government’s agenda, it remains aware of the importance to attract the right ones. As such, Tier 1 focuses on two types of immigrants: investors and entrepreneurs.
#6. Marketing and business support from the government
(Photo by Craig Barritt/Getty Images for London & Partners)
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Prime Minister David Cameron and London Mayor Boris Johnson launched “Tech City” in 2010 in order to put more spotlight on the London’s tech cluster that was developing in the Shoreditch area.
TechCity promotes British digital economy and facilitates dialogue between digital entrepreneurs and government so that policy makers can react in an agile manner to the tech sector needs. Most importantly, TechCity offers various degree of support to digital entrepreneurs across Britain.
London & Partners, Mayor’s promotional company for London, highlights that since the launch of TechCity in 2010, the investments from venture capital firms into London’s tech sector has increased tenfold.
Even though these policies have a national scope, London remains the major beneficiary mainly for social and cultural reasons.
#7. Entrepreneurial spirit
British entrepreneurship is very much celebrated and encouraged through many initiatives. Find a partial list of current competitions through Entrepreneur Handbook.
#8. Pool of talent
UK has a large number of top universities in the world both at undergraduate and MBA level. These top calibre graduates often choose to pursue their careers in the City. As it is often said: when there is demand, there will be supply and London is exactly where the tech scene is thriving at the moment. Number of tech professionals is growing both through domestic channels and through international labour movement.
#9. Easy integration
The predominance of English language, the most commonly spoken language in the world, enables London to naturally be at the centre of the business activity. English law, leading choice of law governing international contracts, makes British legal system one with which businessmen are most familiar with compared to the other legal systems in Europe. This enables London to be one step ahead of the attractiveness game once again. Last, but not least…
#10. Numbers speak for themselves
Study by Ernst and Young clearly demonstrates that London is racing ahead in the tech startups race compared to its European counterparts. At 1’009 tech startups seen in the period between 2005 to 2014, the figure is more than treble compared to Paris, the second European capital on that list, and is higher than Paris, Dublin, Madrid and Frankfurt combined.
Ernst and Young’s ‘Attractiveness Survey’, May 2015
Venture capital investment statistics in tech firms by TechCity UK
KPMG report highlighting London’s tech sector as a leading job creator
“London: Digital City on the Rise” by Dr. Michael Mandel and Dr. Jonathan Liebenau
London & Partners on success of TechCity
Information about UK visas from the Official Government website
By Yulia Kiseleva