2016 wasn’t a great year for London’s Silicon Roundabout. The UK’s answer to the famous Valley, the East London Tech City has been a hotbed of startup talent since the recession pushed down rents and some of the world’s most exciting tech companies invested in the area. The area’s promising rise stumbled in 2016, though, with HMRC figures suggesting new business openings fell by 70%.
Colin Jones of accountancy firm UHY Hacker Young said in a statement: ‘Silicon Roundabout has fallen off the top spot in terms of new business creation, it is a victim of its own success. The Silicon Roundabout area gained popularity with internet companies originally due to its historically low rents. Now that rents have soared, the area has lost its competitive advantage.’
So, if London’s key tech hub is showing signs of slowing, and Silicon Valley isn’t the obvious go-to it once was, where are the alternative incubators of tech talent?
North America’s fourth-largest city, Toronto, is not quite there yet as an entrepreneurial powerhouse but is well poised to become one. Some 150,000 full-time students live in Greater Toronto, and the local government is remarkably supportive of technology innovation. Both Ontario’s provincial government and Canada’s federal government have set up grants to encourage investment and innovation in the region.
Other factors like affordable healthcare, a vibrant city center, and a positive currency exchange against the dollar, will see Toronto grow as a startup hub in the coming years. As the commercial capital of Canada, Toronto is posed to give north American startups an alternative from New York, Silicon Valley, or Boston.
Home to success stories like SoundCloud and Delivery Hero, Berlin has firmly established itself as a place of opportunity for startups. Relatively low living costs (some 43% lower than in London, for example) are helping startups find their feet, while the city’s vibrant creative output and cultural significance make it attractive for younger entrepreneurs.
In July 2016, one startup was founded every 20 minutes in Berlin, and investment in Berlin-based startups was greater than that of London in 2015. There are teething problems that the city needs to overcome - a skills shortage, a bureaucratic founding process, and relatively conservative investments - but if it can, it will fast become Europe’s number one tech hub.
There is something of a concerted effort in Dubai to make the Dubai the next Silicon Valley. With some success stories already under its belt, many tech startups are flocking to the UAE city, with incubators and accelerators supported by government initiatives.
‘It is establishing itself as the destination of choice for tech startups seeking to access emerging markets, says Muhammed Mekki, founding partner of Astrolabs. ‘With over 2 billion people living within a four-hour flight radius and the right infrastructure to support a thriving start-up ecosystem, Dubai is a compelling location to consider for founders from around the world.’
According to CBRE, Paris is second only to London for tech startups. It’s quite the claim, but the French capital was home to three unicorns in 2016, including BlaBlaCar. France had, until recently, developed a reputation of being unfriendly to startups, so much so that the government has put some strong measures in place to make its capital more appealing.
It’s worked, and 2017 will see Station F, an ambitious project set to open in April, become the world’s largest tech incubator. The project’s director, Roxanne Varza, hopes to see ‘one thousand startups’ in the space, as well as the likes of Facebook and VC firms like Daphni, Ventech, and Kima Ventures. It remains to be seen whether or not Station F can cement Paris as a leading innovation hub, but such an ambitious project means all eyes will be on the French capital in the coming years.
Just because Silicon Roundabout is showing limited growth doesn’t mean London is struggling more generally. Perhaps surprisingly, the central London area around Leicester Square saw a 142% increase in startup creation in 2016. In fact, the likes of Facebook, Apple, and Google have decided to set up their offices in areas of London away from Silicon Roundabout, and many are optimistic that the spread of tech companies across London will protect against another spike in rental fees.
Some £7.2 billion was invested into UK startups in 2016, a figure that will calm any worries about a London decline following the UK’s Brexit vote. Gerard Grech, CEO of Tech City UK, said: ‘Anybody trying to build a negative argument about the relative performance of a single postcode in East London is seriously missing the point and is in danger of talking down one of this country’s great global strengths.’ Silicon Roundabout may be struggling, but London is alive and well.