LONDON, UK — The Old Street traffic circle doesn’t look like a place you’d want to linger. A three-lane gyre of fast moving vehicles built over a gloomy subterranean shopping precinct and a forgettable metro station — this is surely London at its most unprepossessing.
So you could be forgiven, as your black taxi cab whizzes across on its way somewhere decidedly less prosaic, if you fail to realize that you have just passed through the epicenter of the most technologically innovative business community in Britain, perhaps even Europe.
Any doubts about the credentials of Old Street were put to rest this month when the Silicon Valley Bank — which claims a role in seeding Californian tech brands such as Cisco and Mozilla — announced it was launching a full UK service to capitalize on this burgeoning start up scene.
Greg Becker, the bank’s chief executive, described his new London branch as “a significant step in the evolution of the technology sector in the UK,” and predicted “remarkable things” from his clients in based around the east London intersection.
Such backslapping was repeated this week in London, when bank executives mingled with Britain’s young digital sector at Le Web, the first ever summer offshoot of Europe’s largest technology conference, held every December in Paris.
If that wasn’t enough, London has been listed — after Silicon Valley and New York City — as the third most successful digital innovation “ecosystem” in an influential study attempting to map the “startup genome.”
Such is the buzz around Old Street, that efforts to brand it as “Tech City” have largely been ignored in favor of the catchier “Silicon Roundabout” — an epithet that neatly sums up the ambitious bravado of its denizens while raising an ironic eyebrow to the quotidian surroundings.
“When you get someone like the Silicon Valley Bank setting up, it is definitely a validation that London and the UK are very much at the center of the tech and digital renaissance,” says Eric Van Der Kleij, chief executive of the government-funded Tech City Investment Organization.
Prime Minister David Cameron has already claimed the bank’s interest as a coup.
“Look what’s happening in east London,” he told his Conservative party last year. “Europe’s financial capital is now matched by Europe’s technology capital in Tech City. Facebook, Intel, Google, Cisco — even Silicon Valley Bank, seeing our potential and investing here.”
Yet, even amid claims of a recession-busting miracle, there are concerns that such confidence is misplaced. As with all internet-based success stories, the “bubble” word lurks in the background. Is there really a market for all these new ideas, and is Britain the place for them?
Van Der Kleij is unsurprisingly bullish about the Roundabout’s prospects, claiming more than 700 companies have set up shop in the neighborhood. Among them are success stories such as TweetDeck, a microblogging tool that sold to Twitter for $40 million, and music site Last.fm, which was acquired by CBS for $280 million.
“It does seem to be expanding,” he told GlobalPost. “It’s increasingly becoming an incredibly important engine room for growth. Tech City is leading the charge in this type of growth and the sector itself is probably the one that is going to lead us out of the economic challenges we have.”
But for every start up company that hits the big time, there are dozens more struggling for investment. While Silicon Valley Bank’s presence and changing attitudes among major UK lenders will help, they won’t curb the unrealistic expectations that are regularly heaped on the internet sector.
An interactive map created by Tech City generates both hope and doubt.
The map pinpoints the locations of more than 1,100 digital companies in the vicinity of Old Street. It’s a good indication things are on the up — and growth statistics are expected to be independently verified by the Centre for London think tank later this year.
But with many of the names on the map belonging to tiny, unheard of ventures often supplying services to other digital start-ups (in some cases they belong to art galleries and nightclubs) there is an inevitable vulnerability.
Van Der Kleij, however, insists this ecosystem is less fragile than it looks. He says innovations such as cloud computing and low overhead — in what’s still a relatively cheap real estate market — give new businesses plenty of breathing room. Despite state encouragement, it is, he adds, largely self-sufficient.
“It’s an organic cluster — it was created naturally, not by government diktat, evolving because it wants to be there. If you nurture it just a little it can grow a lot more sustainably than, say, a cluster which you try to artificially create.”
Also weighing heavily in its favor is location. As befits a busy traffic interchange, it is well connected with other key economic hubs in London. Both the main financial district and the heart of the city’s powerful advertising industry are close by.
Not only that, but Old Street forms the gateway to the hipster districts of Shoreditch and Hoxton, where bars and coffee shops are filled with young creatives sporting ironic facial hair and retro spectacles — a fact that will please Google chairman Eric Schmidt.
Schmidt, in a speech last year, chided Britain for failing to commercialize its tech innovations, but said the answer lay in bringing “art and science back together.”
Van Der Kleij agrees: “Those creative classes rubbing shoulders with the technologists — at that intersection point you’re getting innovation taking place. That’s what gives us our secret sauce that makes us different from Silicon Valley and that’s what gives us the potential growth.”