Despite recently celebrating its first birthday with a glowing reference from Prime Minister David Cameron, there is still work to be done before London’s Tech City can be called a success, according to a number of people based there.
An event held to provide an update on the scheme so far – which naturally took place a stone’s throw from Silicon Roundabout – many participants sang Tech City‘s praises, primarily for the networking opportunities it has provided to start-ups and the guidance offered in terms of setting up a business and understanding the tax situation for start-ups.
Speaking just a few weeks ago when Tech City celebrated its first birthday, David Cameron said: "One year ago we made a major commitment to helping the tech cluster in East London grow. The successful growth we see today is thanks to the talented, creative entrepreneurs who have decided to set up there."
But at the event a number of people said that they have worries about the impact the scheme is having and where it will be in a year’s time.
Matt Evans, founder of Solid State Group and an "incubator" at office space provider Hoxton Mix, said he had a number of concerns about the project. In particular he was worried about the lack of affordable desk space in the area.
"As large companies are moving into the area they are claiming a lot of office space and rent is increasing because of that. If the area becomes too commercial you run the risk of the area losing its cool vibe such as the independent coffee houses that make it so unique. There is also the risk of losing start-ups to locations further east," he said.
Georg Ell, GM EMEA at Yammer, echoed Evans’s thoughts and added that pushing start-ups further east is less than ideal because areas such as Hackney Wick and Dalston lack the same atmosphere as Silicon Roundabout.
Evans added that another fear is the broadband infrastructure that is currently in place throughout the Old Street and Shoreditch area. "Broadband needs to be faster and cheaper," he said, adding that the current 4G trial is taking place at various points across London but not around Silicon Roundabout.
Yammer’s Ell added that getting younger people interested in programming and heading down the entrepreneur route is another challenge. "We want to save more talented people from a wasted career in banking," he said. "We need to get more university kids interested in entrepreneurship; that’s key to Tech City’s success."
Concerns were also raised by other attendees at the event that Tech City is little more than a government PR drive, given that there was already a thriving community of tech start-ups in the area before David Cameron announced the initiative a little over a year ago.
However, Eric Van der Kleij, CEO of the Tech City Investment Organisation, said in fact the government is trying to stay in the background as much as possible.
"[The government] is trying to stay out of the area to avoid messing it up. Our role is to shine a light on it," he said at the event, adding that the government is putting a number of schemes in place to help Tech City grow organically.
This includes the introduction of lifetime capital gains tax relief for entrepreneurs, so the first £10m of capital gains is taxed at just 10%. They have also introduced a number of tax reliefs to VCs looking to invest in the area. Van der Kleij described it as one of the most attractive angel investment tax policies in the world.