London has seen an explosion of start up activity since the 2008 recession, as the Brexit hangover looms, is the start up boom here to stay?
London’s ability to withstand the uncertain forces of Brexit are in large part grounded in its entrepreneurial ambition. While many acknowledge entrepreneurship as a path borne from necessity in 2008, nearly a decade later there are over 4000 start ups in London with investment interest showing no signs of abating.
One proxy for new business growth outside of the typical investment capital figure is the growth of all flavours of start up spaces from accelerators to co-working spaces. Hubble lists over 45 accelerators in London alone. “We’re expanding to new locations” says Jacob Fisher at Runway East a high end co-working space “we target growth start ups and many have already raised capital for example through SEIS”.
It turns out that SEIS (Seed Enterprise Investment Scheme) is quite the boon for sustaining growth activity. Launched in 2012, it offers both income and capital gains tax relief for start up investors. “There are obvious business reasons to grow in London including the upcoming decrease in corporate tax to 17%” explains Kristy Sandino at the UK Department of Trade in New York. But she also acknowledges the role of specialist growth clusters.
Similar to New York’s economic mix, London also has a strong creative core worth £35bn to the city. This month, the Mayor announced a plan to convert the Thames estuary into a creative industries hub which will include a home for digital creativity and gaming at the University of Essex. If you are looking to explore London’s creative literacy and business, this is one of the better curation of events and networks to kickstart your journey.
AI/Robotics is another specialist growth area. British Robotics Seed Fund launched in December is the first investment fund specialising in UK-based robotics. In addition, further funding of £17.3m was recently announced for artificial intelligence and robotics research to be carried out by British universities. A recent report by Accenture estimated that AI could contribute up to £654bn to the UK economy by 2035. Note consulting firms may just be extinct by then too.
Such funding increases to universities are not optional if London is to compete with other European cities as a start up hub. London universities are the backbone of its innovation and future talent supply and are increasingly active in supporting student entrepreneurs. The Kings College Entrepreneurship Institute recently announced a new 12-month accelerator programme while London Business School has a burgeoning Angel Investment network.
However, one of the recurring areas of concern to expansion is that of the impact of immigration on talent. Douglas McWilliams, one of the UK’s leading economists believes that over 40% active in the UK tech sector are EU-born rather British born. Yesterday the Government announced a 25% increase in the number of Tier 1 Exceptional Talent Visas but it is a small improvement. Post Brexit immigration policies will be key to maintaining London’s competitive advantage rooted in a diverse workforce.
For entrepreneurial Brits the unplanned political pregnancy of 2016 is an opportunity to rise to the occasion. Core to London’s continued magnetism are primal factors that other cities cannot replicate. After all, who can resist a British accent surrounded by 10 nationalities at 7pm Greenwich Mean Time with a pint of self deprecating wit at the ‘Hung Drawn and Quartered”?
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I’d like to thank Kristy Sandino at The Department for International Trade, Jacob Fisher at Runway East, Serena Oppenheim at the Goodzing, Sarah McVittie at Dressipi, Emma Sexton at the Flock Global, Emma Watkins at Agora London, and Vinay Trivedi at CityMapper for their insights.
Sources and Recommended Reading
- London’s Economy Today — February 2017
- London’s Start Up Guide 2016 — Everything you need to know — Rise
- Kings Entrepreneurship Institute Annual Magazine — KCL
- Seed Investment Enterprise Scheme — HM Revenue and Customs
- Mayor unveils plan to turn Thames Estuary into creative hub
The Best of Local Businesses
Two food favourites this month: