Tech City: Nice idea, but we have bigger challenges if we want to take on Silicon Valley

I feel like I should be enthused and positive about David Cameron’s plan to turn parts of London’s East End and the post-2012 Olympic Park near Stratford into the UK’s version of Silicon Valley.

After all, it is good to hear a prime minister enthusing about the role of technology, of tech start-ups and entrepreneurs in creating jobs and building the businesses of the future. Can’t fault him there.

He has gathered a few big names – Silicon Valley names, ironically – such as Google and Cisco to back the East London Tech City. And the proximity of City of London finance and government support means that other big names such as Intel and BT say they are willing to invest in the area.

I hope it is a huge success, I really do. But…

Nobody in California decided one day to turn what was a pretty dull, lifeless area around San Jose into what we now know as Silicon Valley. Its growth was organic, a phenomenon that came out of the entrepreneurial culture of California, from rent increases in San Francisco forcing small businesses out of the city, and the proximity of super-smart tech graduates at places like University of California, Berkeley – one of the pioneers of Unix and open source development.

Over time, the money men were attracted to the area, and the culture of innovation and venture capital investment grew to what many now see as the spiritual heartland of the global IT industry.

Look also at India. Talk to any of the big Indian IT service companies and they will all attribute their growth and success to the same thing – the lack of government involvement. The Indian government deregulated its IT sector and let them get on with it.

In recent years, the area around Shoreditch and Hoxton in east London has become something of a hotbed for small media, social networking, mobile and design firms – and it’s this organic trend that Cameron is hoping to leverage. It has at least one root in common with Silicon Valley – business rents in what was once a pretty deprived area of the city rose more slowly than the booming property years of the past decade in the capital, making it an affordable base to start a company.

But despite the tech talent calling the East End its home, I can’t help but be sceptical about Cameron’s grand plan.

Good luck to the start-up firms that take advantage of this opportunity. If they have a great idea, are well run, by passionate and committed people, with the right financial backing, they will succeed. But that would be the case as much as if they were in Harrow not Hoxton.

If you really want to build on an established tech base, then what about Cambridge and the so-called Silicon Fen? This was another area to receive much government focus in the past, and through its connections with the local university has been home to some of the UK’s best tech businesses, such as Autonomy, CSR and ARM.

The UK’s challenge in growing the next Google or Facebook is not its location, it is about business culture. Autonomy and ARM are rare examples of British tech successes that have managed to stay independent – but both are regularly cited as possible acquisition targets for US or Asian giants. If a smart company – whether they are in Shoreditch or Swansea – came up with an idea that just might be the next big thing, how long would it be before they were snapped up by Silicon Valley? It’s no surprise that Cisco and Intel are involved in the East London plan – they are two of the most voracious buyers of clever tech start-ups.

We are good in this country at starting up tech companies, at nurturing them through their early days and convincing people they have the potential. But then what? How many UK venture capitalists have the funding and the patience to let someone develop into a Google?

And what’s more, when that NewGoogle starts to grow and look for the IT talent it will inevitably need, where will it find the skilled, enthused, technically trained employees it will need to grow, in an environment where young people are so discouraged from studying or working in IT?

Of course, all of these concerns are no reason not to try, and it is great to see something like the East London Tech City taking shape. But don’t get too excited just yet – there’s a lot more we need to revitalise the UK tech scene before we can seriously talk about taking on Silicon Valley.