How have Silicon Roundabout entrepreneurs reacted to Tech City’s Impact Report?
“It would be delusional to believe that the Silicon Valley tech cluster was catalysed without government support,” says angel investor Alex Hoye, who co-founded his first start-up in the Truman Brewery on Brick Lane “because they rented the offices by the week, and we didn’t have much runway” and went on to grow that into a multi-national, AIM-listed company. Hoye has in turn invested in a range of east London-based companies like Skimlinks, Conversocial and Brainient as well as the Seedcamp incubator.
“It was different support, much larger investments in defence and education, but it had a tax-supported initiation,” he says. “And to underscore a strong positive, I wish that more of the tax I pay in the UK had the degree of transparency and openness to listen to how it can be channelled better. Spending a couple of million on the [Tech City] project is not a big ask compared to the size of the prize and to the waste lost in other initiatives.”
While a firm supporter of what it is trying to achieve, Hoye is not totally uncritical of the Tech City Investment Organisation: “It seems resource-heavy for its current footprint, but, again the price tag is not too high, so it should drive to have more impact on areas not addressed by market forces.
“To be more specific, some of the specialties that it has staff against may be best done through private means or partnerships – for example, scaling internationally – whereas, if you do a good job of addressing areas market failures will not address correctly, like making the “digital and physical interface” to make East London a great “place to live and work”, it will attract great talent and investment.”
“FDI from companies and VCs influenced by meeting with a lifelong civil servant and a nice ego-boost dring with a higher up in UK government is not ‘smart money’.”
Hoye seems to agree with The Kernel’s conclusion that Tech City must be an advocate for east London in government and not just abroad. “One of its informal mandates ought to be a formal one,” he says. “That is, being a mouthpiece for this mission-critical sector to the slower, less-effective government to fix the multi-billion pound issues that are obstacles to growth and the key to making Britain as well as East London competitive, like forcing through more flexible, more responsive, faster bandwidth into the area via regulation (opening up dark fibre) or sheer China-style direct investment.
“To filter to the punch, do more that the private sector will do poorly or not at all. Make feel-good meetings with corporates and investors who will (or should) make their decisions on the output of great impact a light element of the outcome, and keep the team agile, transparent and results-driven.”
Jack Lenox, an entrepreneur who has previously written about Tech City for The Kernel, takes a sterner view. “In theory, the organisation is a great idea and I think that there is nothing wrong with cultivating the east London ecosystem of new tech start-ups. In practice, the Tech City Investment Organisation is very much the big friendly elephant, accidentally trampling around and symbolically damaging the hard work of many of those that it is trying to help.
“Now, a clumsy elephant is one thing, but a clumsy elephant that is costing the taxpayer in excess of £2 million a year and seemingly achieving nothing greater than a bit of PR for the handful of startups that it’s using as its poster boys is frankly depressing – and alienating – for everyone else,” writes Lenox.
“The biggest problem faced by start-ups in London, as far as I can see, is finding genuine, unambiguous financial support. Banks aren’t lending, angels scarcely seem to exist – and where they do exist they sometime expect you to pay just to see them – and VCs can often feel out of reach. In such a climate, watching some quango spunk £50,000 on a terrible WordPress theme – something that as a freelancer I would have charged about £1500 to do – is very demoralising.”
Lenox is expressing four of the concerns we hear most often from entrepreneurs: that TCIO is selective about its favours, wasteful with money, occasionally incompetent and that it doesn’t have much of an idea what start-ups really need to succeed.
Another founder, who preferred not to be named, said: “I just don’t understand why it exists. It appears focused on helping a very small number of people – the ‘elite’, who don’t need their help any more anyway – and I am yet to see any benefit to east London that wasn’t either done by central Government or was already happening before Tech City was set up.
“I suppose it’s a much smaller operation than we all sometimes think. They’re just very good at promoting themselves – sometimes, I’m afraid, at the expense of the entrepreneurs. For example, I don’t get why the CEO appears at all these international conferences when he should be telling organisers to give his place to a founder with a company to PR.
“I’m also worried about damage being done to the ecosystem, because they’re setting up all these big expectations that can never be met. The hype is ridiculous and doesn’t bear any relation to the reality. I think the public and whoever UKTI is talking to abroad are being misled about the scope of what’s actually going on in east London. And don’t even get me started on how much it costs to rent office space here now.”
Plenty of chief executives and investors are more positive about what the Government is doing. Michael Acton Smith, chief executive of Mind Candy, the company behind Moshi Monsters, thinks that entrepreneurs such as Lenox should be worrying about something other than Tech City. “I think it’s fantastic that this Government recognises the importance of tech start-ups to the future health of the UK economy,” he says.
“It’s far better that they are shining a spotlight on our sector rather than ignoring us. Entrepreneurs that have gripes with Tech City should spend less time grumbling and more time focused on building world class businesses.”
So far as The Kernel can tell, the message to UKTI appears to be: raise your game, tighten your belt, stop claiming credit for what other people have done, dial down the rhetoric… and then we’ll all get along just fine.
Browse The Kernel’s full coverage of Tech City’s first impact report.