“Silicon Roundabout” is not yet a household name. Many residents of London’s Shoreditch area have never heard of this cluster of dozens of technology start-ups on their doorstep.
But as London stakes its claim as Europe’s digital heart, entrepreneurs from across the Continent are flocking to the area around Old Street and Brick Lane.
“The area is an accelerant for business and ideas,” says Matt Webb, chief executive of Berg, a technology and design consultancy on Scrutton Street. “Business is better when it’s easier to meet clients and when you can ask someone nearby if there’s something you don’t know. It’s perfect that it’s Shoreditch too: we’re close to the centre of town, but not too close.”
Since the launch of the government's “East London Tech City” initiative in November, Silicon Roundabout’s profile is rising internationally. Cisco, the US networking technology company, this week pledged to invest millions of dollars in the area.
Most of the companies in Silicon Roundabout have rather less cash to spare. In a notoriously expensive city, Shoreditch’s old warehouses offer a cheap home and short-term leases.
“I remember when [dotcom boom] businesses had millions of pounds of rent and it was one of the reasons they went under,” says Richard Moross, chief executive of Moo.com. “East London is a bit more flexible and it isn’t Soho prices … The West End is pretty stuffy, full of tourists and five times the price.”
Moo and nearby Songkick, a music site, sublet their offices to smaller start-ups, while Moo’s annual summer parties on nearby Brick Lane have also helped to foster the local community.
Last year saw the creation of TechHub, a flexible working space right on the roundabout, with backing from Google and Pearson, owner of the Financial Times.
David Caldwell, one TechHub resident, recently launched yourjobdone.com, an auction-style site that helps busy people pay individuals to clean their house or do their shopping.
“Having people around you who are also venturing their life savings on pursuing a dream is very important positive reinforcement,” he says. “It also provides a resource to bounce ideas around and get feedback. Before TechHub opened, the only place I could get that was in San Francisco.”
But Mr Caldwell, an Australian, has been forced to leave London because he could not gain a UK visa, relocating to California. As well as the “entrepreneur’s visa” proposed by the government, many British start-ups would like to see an engineer’s visa, to help them compete with the US for developers.
Yet Frederic Court, partner at Advent Ventures, already sees some of the characteristics of Silicon Valley emerging in east London.
“It obviously happens at a smaller scale but the level of concentration of talent, entrepreneurs and increasingly role models is staggering,” he says. “The next step is to see more investors move east, next to the City, which will certainly happen in the near future, especially for early stage investors.”
White Bear Yard, which provides funding and office space to start-ups, is already close to Silicon Roundabout in Clerkenwell.
“We want to partner with [entrepreneurs], support their ambitions and align our interests so that everyone involved can participate in the success,” says WBY’s Eileen Burbidge.
“In order to do this at a consistent level, it makes sense for us to be where they are – and not in Mayfair.”
Shoreditch has proved a profitable place to invest. Even in the past couple of weeks the area has seen two buy-outs: Latitude and Techlightenment, both digital marketing specialists.
Yet the aspect of Silicon Roundabout that many tech start-ups say they value most is proximity to their neighbours in fashion, media, music, retail and other artistic businesses.
“A lot of the companies’ strengths are in creativity not technology. That is a real strength of the UK,” says Mr Court. One Advent-backed company, Farfetch, settled in the area to be close to the boutiques whose wares it sells online.
Alex Hoye, chief executive of Latitude, says the melting pot of creativity is key to Shoreditch’s success. “London is not Silicon Valley for finance, it’s not LA for video media, it’s not New York for the ad agencies or fashion and it’s not [Washington] DC for regulation – but it’s all in one place.”
As Silicon Roundabout’s fame grows, there a risk that it becomes overhyped, pushing up rents. But Berg’s Mr Webb welcomes the publicity. “The hype is important: the Shoreditch cluster hasn’t yet ignited fully. People need to know that it’s easy to start companies and there’s a support network if they do it here. The more the merrier.”