Second stage investment and room for companies to physically expand is needed to ensure Tech City continues to grow, said Alistair Mitchell, CEO of Huddle.
While London is becoming a recognised tech hub across the globe, companies are still struggling to develop due to a lack of further investment and office space.
Mitchell said that the government has done well to promote Tech City and to provide funding opportunities for companies such as the Enterprise Investment (EIS) scheme. But companies wishing to grow further are coming to a financial roadblock.
“It’s relatively easy to raise early-stage funding, but finding the money needed to become a billion-pound businesses is really hard to do,” he said. “We need to force the issue with direct stimulation from the government.”
Huddle is a successful UK startup which provides cloud-based collaboration tools for enterprise. The company has offices in New York and San Francisco, but its HQ and developer team is based in London. The company will soon be moving its 100 UK employees from London’s Silicon Roundabout in Old Street to the City.
“This is mundane, but office space in Tech City is a problem,” said Mitchell.
He said that 25% of office space in the City is let to tech companies rather than the traditional financial institutions. “The [space] problem is a hard one to fix and people are moving away from Old Street, which is a shame.”
Mitchell said that London has become a “pre-eminent hub for technology” in the eyes of US investors. Other tech startup sweet spots such as Berlin, Finland and Israel which are often associated with individual sectors or companies, such as Finland being known as the birthplace of Angry Birds.
“Take leading startups like us, Wonga and Moshi - companies in gaming, finance and enterprise tech – London’s got it all," he said. "That’s what the investors really like about it.
“From a development standpoint, the UK has a much higher standard and tenure is longer here,” he added. “In San Francisco, people are a lot more fickle and the quality of developers is not as good.”
But Mitchell warned that if US investors come over and offer attractive startups money that they can’t easily get in the UK, they may be persuaded to go to the US.