There has been considerable hype about London in 2014, driven by a growing number of exits and successful IPOs. The full cycle of the capital’s tech hub is becoming better interlinked, with business transfer agents able to forge closer links with London corporate finance structures. In one week in January 2014, Google acquired DeepMind and Zynga acquired NaturalMotion, with the two transactions seeing more than $1 billion invested in city’s tech sector. The two deals sent a strong message: the digital sector in the UK’s largest city was suddenly a financially viable technology hub. Nonetheless, some obstacles remain, and growth will be judged by more factors than just purchases.
London’s bright start to the year continued. Circassia, a bio tech start-up, floated in London for more than £500 million, creating the largest valuation of a British life sciences company in history. This was followed by Just-Eat and Zoopla raising more than £2 billion. Not only were London tech companies proving they could engage with global consumers, they were showing the business acumen to translate it ultimately into financial success.
London’s tech scene is global, diverse, and creative, with large sectors like music, fashion, and mobile. Much like Foursquare is a seasoned start-up and an inspiration to younger start-ups in New York City, companies like Net-A-Porter, Moshi Monsters, Moo and TweetDeck have marked trails for budding entrepreneurs in London. To this point, Last.fm’s £140 million exit to CBS Radio in 2007, along with European majors SoundCloud and Spotify, have set the tone for London’s vibrant music scene, which includes start-ups like Songkick, RjDj, Musicmetric, and Tastebuds.fm.
Nonetheless, there are still significant challenges to overcome for this budding global epicentre of digital potential. While the venture-capital situation is slowly improving, investors are still very conservative in London due to a lack of big exits and return on capital in recent years. While the get-rich-or-die-trying mentality of the US is ingrained in its people, London’s tech community is becoming more receptive to the entrepreneurial mindset.
Immigration, the number of women in technology and infrastructure have all been recognised as serious problems for London’s digital industry but the most urgent of these issues is a shortage of talent. Organisations such as Makers Academy and Decoded are providing courses for digital skills, which is a step in the right direction. Many believe the government needs to make technology an integral part of the curriculum. For example, a recent report from the UK Digital Skills Taskforce outlines the necessary requirements to tackle this skills shortage.
Whether London’s tech scene is destined to experience explosive growth, or whether it will grow slowly and steadily, informed by its own cautious culture and creative strengths, is a question that can only be answered in a few years’ time.
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