Tech City suffers symptoms but it’s a UK epidemic
A shortage of skilled workers. A crippling lack of cash. Business opportunities strangled – and more than a hint that the UK Government had got it wrong over its support for the technology cluster.
Had such a damning independent report been delivered about Cambridge, entrepreneurs and investors might have joined hands and headed for the hills – and given the landscape of Cambridge those hills are a long way off.
It happened to refer to Tech City. Produced by GfK, one of the world’s leading research companies, the report’s credibility could scarcely be challenged.
Almost 80 per cent of Tech City companies said a lack of skilled workers was restricting their growth; a third believed a lack of access to capital was hindering their business. A similar number said that as a consequence their company was missing significant business opportunities to expand. Over 40 per cent said they were finding it hard to hold onto the staff they did recruit. “Our research shows Tech City is at a tipping point,” said GfK.
Steve Leith, who heads up Grant Thornton's early stage technology team in Tech City, said: “Whilst there is an increasing flow of angel capital, we see a growing gap for businesses requiring investment of £500,000 to £2 million. This is in stark contrast to the development of the funding community in the US where the cycle of tech entrepreneurs reinvesting in startups is fully developed and the VC community has a greater appetite for risk.
“UK Government supported initiatives such as the MMC London Fund and GrowthAccelerator may prove part of the solution, but more will be needed to fulfil Tech City's potential, and avoid a loss of talent and investment opportunities to the Silicon Valley dollar.”
Tech City’s business leaders have mixed feelings about the effectiveness of the UK Government’s support so far and believe there has been more PR than action from Government. This ‘hype’ is seen as negative - pushing up rents and salaries and attracting global firms that have poached the best talent.
No-one is being smug here because this is a problem for UK plc. As we reported this week, Cambridge is losing hundreds of research and technology jobs to India within one plc alone – AVEVA – because the company says its expansion plans are being stunted by infrastructure problems that are just not being addressed, let alone tackled.
Serial entrepreneurs Mike Lynch and David Cleevely have each recently called for Tech City and Cambridge to work together to optimise their respective but synergistic strengths. That would be a start.
More than at any time in its history as a trading nation the UK needs to forge one powerhouse supercluster that presents a dynamic and united face to the world. One that would be taken seriously by the megapowers of the business world – not a fragmented collection of clusters doing their own thing and diluting the force of the collective.
Until the debate is taken out of a geographic context and becomes an issue central to national economic strategy then all of the UK’s technology clusters could eventually become candidates for the sick ward.
Despite the excellence of the Cambridge cluster’s best companies, there are still far too few of them. It’s the global reputation of Cambridge University for perennially producing world-class science and technology – as well as producing generations of brilliant students and future employees – that is keeping Cambridge in the game globally. In the long term that could prove a dangerous over-reliance.