The number of start-ups launched in London in 2014 grew by 21% compared with the previous year. The burgeoning tech sector is helping to fuel this growth with an incredible 200% increase in new businesses.
A recent report produced by Oxford Economics, as part of London Technology Week, revealed that the number of companies in the capital's digital technology sector has increased by 46% since the launch of Tech City five years ago. Consequently, London has been branded the most important tech hub in Europe.
London’s start-up ecosystem
Start-ups such as Citymapper and Just Eat have helped to build the start-up ecosystem that now exists in London. Although the Prime Minister’s office recently reneged on its pledge of £50 million to regenerate Silicon Roundabout, the area has certainly undergone a revival.
The streets are lined with pop-up restaurants and new bars. It is an exciting and fashionable place to work so it is understandable why many entrepreneurs want to base themselves there.
The media certainly contributes to the idea that running a start-up is ‘cool’.
National and international publications regularly churn out stories such as ‘The hottest start-ups of 2014’ and ’17 cool new start-ups that will change your life’, thereby adding to the hype and cementing London’s status as a fashionable start-up locale.
With this in mind, is it possible that some companies have jumped on the start-up bandwagon, as it were, just for the sake of being trendy?
Is the entrepreneurial ecosystem that has developed in London actually dangerous, or too tempting?
London start-up incubators: friend or fake?
Whilst there is no denying that running a start-up is incredibly hard work, one can’t help but think that there is an element of fun involved that must appeal to the more naïve businessperson.
On one hand, London-centric incubator and accelerator programmes are tremendously beneficial to companies located in the capital – those start-ups that participate have a 92% success rate.
Of course, these programmes are only able to a small number of start-ups in London and only very best applicants are chosen which skews their success rate.
The European Digital City Index has positioned London as the best city in Europe for supporting start-ups and scale-ups. Certainly, I would argue that London is the best places to establish a business in the UK. There is access to money, mentors, incubators, accelerators, talent (from one of the capital’s 47 Universities) and now, with the increase in co-working, access to cheaper rented office space.
Nonetheless, starting a business in London does not guarantee success.
It is the quality of the entrepreneur and business idea, rather than the quality of the ecosystem that will influence whether a start-up becomes viable.
The capital's start-up scene may be tempting in its trendiness. And the city’s supportive start-up ecosystem may be responsible for prolonging the failure process: if a business is going to fail, it is better to do so fast and move on to the next venture to ensure the smallest possible amount of capital is lost.
Nevertheless, the environment that has been created in London is world-class and essential to ensure that only the companies with the best ideas can flourish. This start-up hub is, I believe, designed to give the very best entrepreneurs - those with good business sense and a desire to solve a problem - the best opportunity for success.