UK government plans East London tech cluster, Startup Visa, review of IP law, £200 million in finance. What?

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The British Prime Minister is expected to announce today that the East of London, which in the last three years has seen a 700% growth in tech companies starting up there, is to become an officially sanctioned startup ‘hub’ for the UK.

Although he will make a speech saying that London will be transformed into a “world-leading technology city to rival Silicon Valley” – a worthy but rather over-optimistic claim – there is some meat here. The government appears to have secured several commitments from companies including Google, Facebook, Intel and McKinsey & Co to invest in the long-term future of the area.

As is the way with PMs’ speeches, the media has been circulated an advanced copy. So among other things he is expected to say:

“We are firmly on the side of the high-growth, highly innovative companies of the future. Don’t doubt our ambition. Right now, Silicon Valley is the leading place in the world for high-tech growth and innovation. But there’s no reason why it has to be so predominant. Our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic Park to help make East London one of the world’s great technology centres. I want to show you how we can get there.”

For the past few weeks I know for a fact that they have been laying the groundwork for this, meeting companies in the area and VCs in London about what it takes to create a high tech cluster. I know because I’ve been in one of those meetings with the PM’s researchers when they visited the area, specifically TechHub, a co-working space for tech people which, in my spare time, I’ve cofounded with Elizabeth Varley, which happens to be just off the Old Street roundabout where a lot of tech companies already are.

So what has come to be known as the Silicon Roundabout area, the government is now calling “East London Tech City” – a tech cluster that they hope will stretch from Shoreditch and Old Street to the Olympic Park.

“This is what local businesses are saying they need. What part can you play in making it happen?” I have to say: the response has been overwhelming,” is what the PM is previewed as saying.

There is further meat to the announcement.

There will be £200 million of equity finance for businesses with high growth potential and £200 million for new Technology and Innovation Centres – one of which could be in the Olympic Park.

They will also be an opening up of government procurement budgets to small and medium-sized firms (already announced).

But most significantly the UK government says it plans to introduce a new Entrepreneur Visa. So entrepreneurs with “serious investment from a leading investor” could get a fastrack visa to the UK.

Secondly, and more significantly, the PM is expected to say the government will be “reviewing our IP laws, to see if we can make them fit for the internet age,” looking at introducing more ‘fair-use’ provisions to the laws governing intellectual property, the like of which allowed Google to develop in the US.

Furthermore he’s expected to say that:

• The Olympic Legacy Company has agreed to create an “accelerator” space in the Olympic Park, providing office space for companies that grow out of East London and beyond.

• Intel will establish a new research lab in East London, focusing on performance computing and new energy efficiency technologies.

• Google will create an Innovation Hub in East London, a creative space for their researchers to come together with developers and academics

• Facebook will create a permanent home in East London for their Developer Garage programme (currently the FDGL meets at TechHub, but interesting they are contemplating something ‘permanent’ whatever that means)

• Cisco will establish an Innovation Centre in the Olympic Park

• British Telecom will bring forward the roll-out of superfast broadband in Shoreditch and Old Street (woot)

• Silicon Valley Bank, a West Coast institution, will become a fully fledged bank in the UK, and provide financing for technology companies (this has actually already happened)

• Barclays will create a new facility in East London to provide specialist banking services to high growth technology companies in the area.

• McKinsey and Company, one of the world’s leading strategic consultancy firms, has agreed to share its expertise in helping start-up companies and establishing technology clusters.

• Qualcomm will provide expert advice to East London start-ups on intellectual property matters, helping them to protect and commercialise their technologies.

• Imperial Innovations, the venture capital arm of Imperial College London, will advise the Olympic Legacy Company to ensure that the accelerator space is attractive to spinout companies from academia and beyond.

• University College London will work with the Olympic Legacy Company to build a student presence in the Olympic Park, with a particular focus on student entrepreneurship and accommodation.

• Loughborough University will work with the Olympic Legacy Company to develop plans for an Institute of Sport for Health in the Olympic Park, which will bring together business and sports science, and help to create new spinout companies in this field.

Well, there you go.

From the stirrings of an organic hub, the whole tech world now appears to be poised to descend on East London. It never rains but it pours, it would seem.

  • UK Government Plans East London Tech Cluster, Startup Visa, Review Of IP Law, £200M In Finance. What? | JetLib News

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  • Azeem

    This is great news but ROTFL HA HA HA
    “McKinsey and Company, one of the world’s leading strategic consultancy firms, has agreed to share its expertise in helping start-up companies and establishing technology clusters.”

    • Max Niederhofer

      They have industry structure primers that are extremely helpful to many clueless entrepreneurs. For example, I’ve been talking to advertising technology companies, an industry I know virtually nothing about. Having the McK industry primer on ad tech would be very helpful for me to sound less like the clueless noob I am. Getting an intro to the partner who does media agency consulting and can get me in the door of WPP & Co. would be even better. I think we’re wrong to dismiss this.

    • George Bevis

      All sounds like a very good move. I hope there’s a cap on investment size (say, no more than £500k) so the fund managers don’t piss it all away on too few startups. Goodness knows where all the Mayfair-types will get their lattes and steak tartare in East London though.

      • Ajax Jones

        Mayfair types with latte and steak tartare, pleezze. Pinot Grigio and Bife De Cuadril if you don’t mind!

      • Firestone oil change coupon

        That is a lot of money to be spending on Firestone coupons.

        Firestone Oil Change Coupon

    • Nick Franklin

      Yes I found that line pretty amusing as well.

      This is good news, any effort that helps the UK become a more attractive place to start a tech company is fantastic.

      It’s a pity that no amount of effort can bring that California sunshine to East London though.

    • Mark Littlewood

      That is one of the funniest things I have heard all day. Are you SURE they mean McKinsey?

      • Dave from Oz

        That would be the same McKinsey that created Facebook, Twitter, Google search and advised Al Gore on how to build the Internet, right?


  • Max Niederhofer

    In short, this sounds awesome. Govt moves slowly, but if even a fourth of this actually happens during Cameron’s term, that would be truly fantastic.

  • Nick Smith

    This is great news – I just hope that the process for applying to enjoy any one of these opportunities doesn’t get bogged down with the usual Government bureaucracy

  • Steve Daley

    This may be the deal maker that brings me back to the UK.

  • Dave Nattriss

    “Facebook will create a permanent home in East London for their Developer Garage programme” – hmm, that’s news to us! We have been using TechHub for the past few months for our events, but it’s barely ‘east London’, and certainly not permanent, nor has been created as a home for our organisation. So we’re not really sure what Cameron is referring to on that one?!

    Thanks for the heads-up, Mike.

    Dave Nattriss
    Facebook Developer Garage London

    • Andrew Bell

      @Dave ROFL they didn’t tell you or Josh? I wonder if Google, Facebook, BT and Cisco know about this?

      But why oh why East London. Seriously this focus on rejuvenating East London for the Olympics is as blindly stupid as the BBC having to relocate to Manchester.

      A better location for this initiative was near Stockley Park on the M4 corridor near Heathrow and London. Can you imagine people flying into London and then having to get across London (no cross rail) to meet the young bright startups?

      This is purely a political gesture for TV driven by certain journalists and tech startups in London to justify their “Silicon Roundabout” desires.

      I predict it will be a white elephant (and Castle) in a year with no money going to the startups who most need it but it all going to Quango’s and Government bodies.

      • Pete Smith

        Dude — who wants to live and work in Stockley Park?!!

        Great post from Paul Graham from a few years back sheds light on why this is happening in Shoreditch:

        “[F]or a startup location is very important. The key to productivity is for people to come back to work after dinner. Those hours after the phone stops ringing are by far the best for getting work done. Great things happen when a group of employees go out to dinner together, talk over ideas, and then come back to their offices to implement them. So you want to be in a place where there are a lot of restaurants around, not some dreary office park that’s a wasteland after 6:00 PM. Once a company shifts over into the model where everyone drives home to the suburbs for dinner, however late, you’ve lost something extraordinarily valuable. God help you if you actually start in that mode.

        “If I were going to start a startup today, there are only three places I’d consider doing it: on the Red Line near Central, Harvard, or Davis Squares (Kendall is too sterile); in Palo Alto on University or California Aves; and in Berkeley immediately north or south of campus. These are the only places I know that have the right kind of vibe.”

        Meanwhile, from Stockley Park’s Wikipedia page:

        “Stockley Park is a large business estate located between Hayes and West Drayton in the London Borough of Hillingdon … built upon a waste tip that was used by Londoners who would load barges on the canal and come to tip the industrial and private waste from West London. Top soil was added to the site to cover the waste and the modern offices were built on top.”

      • Neuro

        re stockly park BT tried to move there it was a fracking disaster there is zero public transport.

        Even BT’s ceo hated it a direct quote “global companies don’t have a head office in a fucking shed at heathrow”

      • Andy McLoughlin

        +1 “Dude — who wants to live and work in Stockley Park?!!”

      • Dave Nattriss

        Nope, they didn’t tell us (by the way, Josh isn’t our chairman any more, having stepped down after two years to concentrate on his own start-up).

        And we’ve since had confirmation from Facebook’s European Policy Manager that they have no plans to move or start another office as things stand. Cameron’s people seem to have jumped the gun on this point at least.

  • Jennie

    It’s not even April 1st…

    Amazing news, if it works out. Recreating Silicon Valley is more than just words on paper though.

  • Scott Allison

    Wow. This is a great surprise! It seems that this high level govt support is going to accelerate things. Please let that be the case, and not tie us in knots with bureaucracy.

  • Paul Massey

    Hmmm, this is interesting and great on the surface, although some things worry me about what has been set out above (hopefully there is more to come from Cameron):

    1. Lack of mention of a single University – success of Silicon Valley is focused on the Uni scene. Where is the Uni-drop-out entrepreneur hub in East London to match Stamford? Would not one Uni along lines of Bucks New, be what is needed?

    2. I think the term is parachuting – dropping in new resources without paying attention to and giving due respect to the resources that are already there. Much to be said on this but you would hope existing champions of London scene are properly rewarded here. eg. Own-it and others already provide good IP advice. What is the role of the local cultural scene – eg live music – how can we make sure locations like The Foundry are not shut down resulting in an innovation cull? etc etc

    3. Dominance of US firms in the mix – nothing against US tech companies of course, quite the opposite in fact, but there are of course various issues around this from a UK perspective, particularly if you are looking for UK born and bred innovation (and ownership).

    4. What exactly are these relaxations of UK IP laws to create the kind of environment that allowed Google to develop in the US?? Ok, there are a couple of fair use issues, but they are not material; University IP ownership is comparable (eg Stamford owns pagerank patent); Google was available in UK early and didn’t get sued here that I can recall. Tell me where this statement comes from please! Start-ups getting advice from corporates (and again, no judgment upon any of named companies above), doesn’t seem to align with a statement related to relaxing IP either…

    This plus other issues adds up to at least a notion that this should be designed (and from what is above, perhaps redesigned) to avoid doing more harm than good. ie. a large chapter of the scoping doc should be entitled – “How do we make sure this does not kill innovation.” This may need to be brutal and pay particular heed to the impact of corporate sponsorship. I’m sure Leadbetter and all are on to this already.. Overall – it is exciting – shame I just moved out of my flat near Old Street!

    • Mike Butcher

      Imperial College London, , University College London, Loughborough University.

      • Pete Smith

        And of course Cambridge 50 minutes up the road by car.

  • Francis H

    Fantastic, staggering news! This is exactly what the UK needs to be competitive – a major central technology hub.

    Slightly disappointing that there isn’t a lot more involvement from London’s top universities (Imperial College, UCL, LSE and King’s College London) but I’m sure that will happen in time.

    Would also prefer they dropped the “East London” part of the name. Stratford is clearly East London but Old Street/Shoreditch isn’t any further east than the City of London.

    In terms of IP law, not sure what they propose – UK IP law is hardly in need of reform. Possibly the introduction of pointless software patents along the lines of those in the US?

    • Stephen Bardle

      I’m also intrigued by the way this is being packaged as a deal for East London. I
      f the majority of the companies are going to be based in the Olympic Park, then it most definitely is an East London initiative.
      East London is rapidly changing and I hope this means more people who have never ventured past Canary Wharf will take the Jubilee line all the way to Stratford and see just how much the area has and will have to offer.

  • weak incentives

    Good news for London economy but what incentive for an entrepreneur to actually pick up and bring his business to the UK?

    – A visa (if you have VC funding already)
    – a bunch of big companies to steal your employees
    – maybe a special bank account of some sort

    Nothing interesting here, pass. moving along…

  • jessie

    This is fantastic news. If Cameron gets this right, it could to wonders for London.

  • jessie

    This is fantastic news. If Cameron gets this right, it could do wonders for London.

  • duanwenkai

    This is fantastic news. If Cameron gets this right, it could do wonders for London.

  • UK government plans East London tech cluster, Startup Visa, review of IP law, £200 million in finance.  What? (Mike Butcher/TechCrunch Europe) | Stereo Speakers Reviews

    […] Butcher / TechCrunch Europe:UK government plans East London tech cluster, Startup Visa, review of IP law, £200 million in …  —  The British Prime Minister is expected to announce today that the East of […]

  • Darren

    Great idea but I would rather see something to help all UK start ups not just London.

    There are growth and jobs to be created all over the UK not just the capital.

  • PhillC

    I thought the UK already had such an area, which is located in and around Cambridge. I would have much rather seen this level of focus being given to driving start-up growth around that location, which already has a certain level of momentum. London doesn’t really need this, but areas outside the Capital could certainly do with extra investment and resultant growth.

    in answer to an earlier poster’s point, Cambridge University also provides a direct feeder into the local tech community too.

    Not saying this announcement is bad news, just that it could have been better for those of us outside London.

    • Mike Butcher

      I guess I have an interest in disagreeing, but I still disagree. Cambridge has been well known globally for many years biotech and ‘hardware/silicon’ tech but not high-growth, fast moving Internet-based tech & startups which have not had their ‘own’ cluster, at least until recently. I think this initiative – should it come off – is a ‘good thing’.

      • Stephen Kellett

        Jack Lang – Etrade

        All Cambridge based, all major successes.

  • Tim

    I’m sure that UK government invests not in vain – the more such centers and the competition between them for the best minds, the more we’ll see companies like Google, Apple, Facebook.

  • Digitalle

    A great idea in focusing on tech sector as this is a major area for both job creation and export opportunity. Looking forward to seeing how transparent it all is though, as anyone with experience of using other govt departments, (e.g. Businesslink which is a shambles) will know all that there’s a hell of a lot of red tape / hoops etc. All in all though, this govt seems to be on the right track.

  • Steve

    Brilliant news! I just hope that the groundwork is done and this is implemented with longevity in mind. We’ve seen similar promises before in different areas by local Gov’s and they always end up being unsustainable as the investment is just an initial handout.

    Totally agree with others saying that uni’s need to be involved. That’s the kind of thing that will help to sustain it.

    Exciting times for London if it comes off!!

  • Reshma

    Any improvement to the Entrepreneur Visa will be a step in the right direction. Each year there are only about 150 people given an entrepreneur visa. So, this will be a major improvement. And it’s not only if a person gets VC funding, according to what I understand.

    • nai

      Hi Reshma, do you have a source for that statistic? Or is that the going number that you’ve arrived at through your experience?

  • Steve

    Got to love the irony of that. I’m here in London hoping the USA implements their Startup Visa program.

  • Paul Johnston

    I’m surprised and disappointed by this announcement. It really doesn’t cost the government very much to make a big fanfare announcement about making “East London” (really?) a “Tech City” (erm… really?).

    The fact that they’ve attracted some big companies to invest here is not particularly great news. It doesn’t foster the startup community in the same way incentives for entrepreneurs does, and opportunities for seed funding and pushing the boundaries.

    I’m attempting to build a startup culture in Milton Keynes and this announcement just reinforces the idea that the Government likes big plans, but doesn’t put meat on the bone for the whole of the UK…

    Where is the investment in tech outside of London? Very poor..

    • Mike Butcher

      I know people who *commute* to London from Milton Keynes. How is this hard? It remains to be seen how it plays out, but the fact the UK gov is drawing UK/global attention to the area, DOES help foster entrepreneurs, in part not because of anything the gov. does, but because the startups can find and mentor each other better. Peer mentoring is half the battle in startups and spreading people out AGAIN would once AGAIN, stop that happening.

      • Paul Johnston

        I am noy advocating spreading out to every region and just blanket uk wide funding. Many commute from MK to London because they have to.

        It’s just that the opportunities for developing feeder hubs – brighton, MK, Cambridge, Oxford – are there. It doesn’t have to be completely based in London.

        Come and see what we’re doing here… we’re trying to generate jobs and community for the country…

      • Stephen Kellett

        “I know people who *commute* to London from Milton Keynes. How is this hard? ”

        Its not hard, but it a tremendous waste of their time and money. You cannot assume all that time on the train can be productive. Most likely it cannot be at typical rush hour times.

        You spend an hour on the train and then 30 minutes on the Tube. Twice a day. How is that productive? How is this an effective use of funds? And you can’t go out for a meal/drink with your peers because you’ve got a train to catch, no late night coding unless you’ve got a sleeping bag. And so on. Just ridiculous. Not productive.

        This relentless focus on London just leaves the rest of the country to wither on the vine. Such a waste.

  • Steven Gravell

    Silicon Roundabout… perpetuating and worsening your company’s heavy drinking culture since 2006.

  • Steve

    This sounds like an amazing opportunity, and has certainly piqued my interest into applying for one of the schemes and setting up shop where the focus and cash is.

    Why London though? It’s traditionally seen as very expensive, both in terms of salaries and property, could very easily be diluted by non tech start-ups, and is currently more about the scene than the density of tech companies.
    Now, it could be argued that Silicon Valley fits that description as well, but it grew out of much smaller towns and a smaller hub city, as opposed to the area capital and the distractions that brings with it.

    Also, a lot is being made about this being tied to the Olympics. Is this an exit strategy for when the area is left after 2012? Or just to show a good face for the games and for investment to dry up when they’re over?

    Certainly an interesting announcement – and good work by the government to finally acknowledge that encouraging entrepreneurs might be beneficial to the economy.

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