Money always goes to money, or so the old adage goes. When a Conservative led coalition came to power back in 2010, with it came talk of belt tightening, austerity, and a return to the kind of “traditional values” that tend to send a shiver down the spine of the more creatively minded.
Whatever one made of Tony Blair’s misguided attempts to play kingmaker in the Middle East, and satisfy the terms of his “special relationship” with the US towards the end of his Prime-Ministerial stint, it was hard to resist the wave of optimism that swept through the nation during the late nineties and early noughties, the rich promise of a new, globalised economy and a sense that business was no longer just about bankers, bonuses, and boom and bust.
To their credit, however, and notwithstanding the largesse of Canary Wharf, the City and well, let’s face it, most of the UK’s capital city, the unlikely lads of Bullingdon club fame, Cameron, Johnson and Osborne, have worked hard to dispel fears that a Tory government would take satisfaction in bursting the East of London’s Tech and Media bubble.
Perhaps it was the emergence of the term “Silicon Roundabout”, which only really began to take root in 2010 (back in 2008, when the name was coined, 3 Shoreditch printing companies and a couple of strip bars did not a cluster make), that has inextricably bound together both the credibility of East London as a global technological hub, and the reputation of a Coalition struggling to persuade us that it can exercise control over a modern Britain that has begun to resemble a European backwater as much it has an influential Nation State.
Nobody doubts that money, and decent amounts of it, has been made available to provide investment into the Silicon Roundabout, but so far, perhaps like the fortune of Edmund Blackadder’s Great Aunt, it is proving to be “More capacious than an elephant’s scrotum, and just as difficult to get your hands on”.
An article in the Guardian back in March quoted David Cameron in 2010 saying “Today [we are] setting ourselves the ambition of making Britain the best place in the world for early stage and venture capital investment”, but revealed that disgruntled entrepreneurs were being frustrated in their efforts to secure funding, by endless bureaucracy and red tape. The article refers to 2 organisations set up to be the main sources of funding for Tech City, the Tech City Investment Organisation, TCIO, and Technology Strategy Board (TSB).
Former Facebook exec Joanna Shields, from the US, has been charged with matching funding to start-ups on behalf of the TCIO, and she has made a promising start, launching the Million Pound Start-up competition, supported by Digital Shoreditch, and backed by the likes of Boris Johnson, crowd funding platform Seedrs, and KPMG. Its winner-takes-all format, however, will not be to everyone’s liking. Investment has poured into the project, but betting on a sure thing is very different to throwing a funding lifeline to small companies with big ideas, that are struggling to stay afloat.
The TSB has identified numerous priority areas which it would like to help if it can, including Advanced Materials, Bioscience and Healthcare, and offers a wide range of assistance, from feasibility studies, to innovation vouchers, to launch-pads for high tech companies. Beneficiaries include Intelligent Textiles, providers of revolutionary fabric technology, Versarien Technologies, which has grown from 3 to 55 employees with TSB money, and Shoreditch based Somethin Else, with its pioneering sense-based video game Papa Sangre II.
East and famine?
Success, then, to whet the appetite; and yet the rumblings of discontent continue to be heard. “Please sir, can we have some more”. Again, the problem seems to stem from the Government’s refusal to back companies unless they can guarantee success, with the kind of sustainable business plans, revenue guarantees, and established reputations that most entrepreneurs are simply unable to provide.
This raises the disheartening prospect of an established elite growing their businesses slowly but surely, while endless rounds of fundraising take place in town halls and half empty theatres borrowed from universities and banks, where frustrated fundraisers huddle together and await the arrival of the solitary VC or business Angel prepared to give dinner at Sushi Samba a miss, and break bread with the disenchanted souls up the other end of Bishopsgate.
Indeed, the whole future of Tech City is in doubt, however, blaming the rich and powerful for driving up rents and replacing media agencies with dull legal firms and endless risk and compliance associates is, of course, not the way forward. Everyone chooses their own path, and economics is just one of many stimulating forces. Would entrepreneurs have it any other way?
Companies such as Entrepreneur First, who hold their welcome breakfasts at 10 Downing Street, and Playfair Capital, with its stunning Warner Yard premises, have planted their feet, like a modern day colossus, firmly over the crevasse that separates funded from non-funded, aspirational upstart from know-it-all big-wig, navigating companies on stormy waters safely into port, with a dash of inspiration, and a heady whiff of undercarriage.
Funds have unearthed well springs of capital from the unlikeliest of sources; MMC ventures has unveiled an £11m London Tech fund, and Balderstone Capital is putting its money where its mouth is, seeding like a crazed gardener; even the Osborne family are at it, with youngest brother Theo launching the Force over Mass Accelerator fund.
To paraphrase Coldplay in their song the Scientist, nobody said it would be easy, but perhaps, amidst all the trumpets, fanfare, and white noise, somebody could have pointed out it would be this hard. They say the techy streets of Berlin, Munich, Palo Alto and even Lisbon are paved with gold. Can we put the G in the Old Street roundabout? Let it be.