© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Last updated: October 27, 2011 8:18 pm
The digital entrepreneurs of London’s “Silicon Roundabout” area in Shoreditch are coming after their neighbours in the City of London, targeting its financiers for funds and its technology departments for new recruits.
The pairing of London’s newest and most established business districts is the latest phase of the UK government’s “East London Tech City” initiative, which aims to make the British capital Europe’s leading cluster of technology start-ups against stiff competition from the likes of Dublin and Berlin.
Attracting skilled developers is one of the main problems facing enterprising digital businesses in London – not least because many engineering and computer science graduates are lured to financial services companies who can afford much larger starting salaries.
But at the same time as City firms have retrenched, Tech City is on a tear, with new start-ups flocking to the Shoreditch area.
This weekend will see up to 1,000 developers and 100 start-up employers attend Silicon Milkroundabout, a recruitment fair aimed squarely at the traditional university “milkround” which scoops up many of the best students into financial services and management consultancy.
The event was conceived by Pete Smith and Ian Hogarth, co-founders of Songkick, an online community for live music based on Hoxton Square, who hope to show students that joining a tech start-up is as desirable a career option as the traditional City.
That ambition is shared by Matt Clifford, the former McKinsey consultant behind Entrepreneur First, a new social enterprise which plans to provide free mentoring, education and networking for graduates.
These east London entrepreneurs believe they have an asset the world of high finance cannot match for talented developers: The internet brings the ability to build a product that is used and loved by thousands of people, a public recognition rarely afforded to software engineers tuning trading algorithms.
But many students would rather play video games than code them.
“The idea that you can just leave university and start something I don’t think has entered the consciousness of the best students,” Mr Clifford says.
“Engineering in Britain has such a negative reputation – it’s seen as the guy who comes to fix the boiler,” adds Mr Hogarth.
Although not directly commissioned by the government, Silicon Milkroundabout, Entrepreneur First and related initiatives have been galvanised by monthly meetings at Number 10 and the support of Eric van der Kleij, UK Trade and Industry’s “entrepreneur in residence” in Tech City. That is already helping to change the perception of start-ups and tech as a career choice, Mr Hogarth says.
The government has granted some new tax breaks for tech entrepreneurs and investors, but many Silicon Roundabout start-ups are hoping it will also introduce developer visas to ease the passage of the best international tech talent to London.
“I do think it is an opportunity if the UK takes an enlightened approach to immigration to say if there are talented scientists and engineers, we want as many of those as we can get,” says Jimmy Wales, the American co-founder of Wikipedia, the online encyclopedia.
High-level political support cannot change the simple fact that London start-ups cannot afford to match bankers’ pay.
According to research by Adzuna.co.uk, a London-based job search engine, the average salary for an IT role in a bank is £57,000 ($92,000), 19 per cent higher than the average start-up wage.
“Tech start-ups offer greater job satisfaction and the upside of options, but this salary gap is what the start-up community is up against,” says Doug Monro, Adzuna’s co-founder.
A separate flank of the Tech City campaign is hoping to tap that pay differential to boost Silicon Roundabout in a different way: by attracting new investment from a group of high-net-worth individuals who are still bearing the scars of the last dotcom boom.
The City of London corporation this week announced the “Angels in the City” scheme to recruit a new pool of 125 early-stage investors from the Square Mile. The authority is working with the London Business Angels to generate £10m in new angel investment every year, taking advantage of new tax incentives such as the Enterprise Investment Scheme.
A similar initiative called City Meets Tech is planning an event in early December to persuade bankers that British tech is worth backing, with Mr van der Kleij speaking alongside the mayor of London’s digital adviser, Kulveer Ranger.
“There is a huge chunk of money in the city – bankers don’t want to put it in the bank because there is no interest,” says the originator of City Meets Tech, Steve Kennedy, a veteran of London’s start-up scene. “This is a potential way for them to get involved in a sexy, exciting new industry.”
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.