What happened to the new start-up boom in London?

What happened to the new start-up boom in London?

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Date31 Jul 2015
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Posted ByAdmin
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According to the latest research from Sussex Innovation London new start-ups are falling out of love with London after just 12 months. It takes hardly a year for the tables to turn. Just over a year ago, Wired magazine ranked London right up there amongst the hottest hubs for start-ups in the world. In fact it went on to say that London could very well rival Silicon Valley.

Don’t get us wrong. London is still considered the best place in England for start-ups. At number 6, it is the largest ecosystem in Europe according to Compass' 2015 edition of the Start-up Genome Project. However, the invasion by global technology companies and media firms has led to rising property prices which in turn is forcing small start-up owners across London and the South-East to eye other parts of the city when it comes to starting a new business.

Sussex Innovation London’s study of 500 business owners reveals that only 37% of businesses were worried about property rents at the time of launch, but after a year 62% were considering re-location due to increasing rents.

So where are start-ups headed?

As per office space rental marketplace, Hubble, Tech City - located in and around Shoreditch and Hoxton - remains the most popular home for start-ups; however, London is no longer the digital leader in the UK. A recent Tech Nation report - commissioned by Government-backed Tech City -found that 74% of digital businesses are now based out of the capital. Bournemouth, Liverpool, Manchester and Brighton have now emerged as the industry’s success stories.

What if start-ups want to hang on to London?

Recent initiatives to help new London start-ups take their business to a new level include a venture capital fund called The London Co-Investment Fund which is supported by £25m from the Mayor of London and up to £60m from six private sector partners. Over the next 2 years, this fund is expected to invest in more than 150 small businesses plus spur the creation of up to 2,600 new jobs. The fund is specifically targeted at London-based start-ups with expertise in the science, digital and technology sectors who are looking to raise investment of between £250,000 and £1m. More details can be seen found here: http://lcif.co/

Another initiative to address challenges is the business mentoring offered at Sussex Innovation's Croydon incubator hub, which opens this September. The incubator will provide space for around 300 employees to 30 high-growth potential companies. Over the next three years it is estimated the businesses will generate £6 million in turnover and raise £1 million in investment.

Then there is STARTUP SCALEUP – a 6 month IOT acceleration program funded by the European Union for start-ups whose objective is to facilitate both internationalisation and funding.

Start-ups might also be able to get help from government backed schemes:

  • The government’s ‘business finance support finder‘ is a great tool if you need public funding to test and develop your business idea. You can also customise your search by business location, size, and type of business activity.
  • Start Up Loans backed by the Business Bank funds and mentors people over 18 years of age and looking to start a business. They offer ‘soft’ business loans of upto £25,000 for 6% interest with a 12 month repayment “holiday”. To date they have helped fund over 10,000 start-ups with over £50m invested.
  • You can also find business finance in your area using the British Bankers’ Association’s finance finder tool – this includes business angels, regional funds, government schemes and banks.
  • You can also sign up for the Seed Enterprise Investment Scheme - your investors will get certain tax reliefs, making your company more attractive to investment.
  • For equity funding search for sources from: 
  • Innovate UK also runs funding competitions, however each competition has different application process and eligibility criteria.
  • Grants are also available for SMEs with a slant toward research and innovation through the Horizon 2020 programme – the biggest EU research and innovation programme.
  • If you are looking for debt-based finance solutions Business Funding Portal might be worth having a look.

There are a lot of other options for London based start-ups to get funded in the UK. Right from crowd-funding, TSB schemes, Regional Growth Funds, R&D tax credits and the Seed Enterprise Investment Scheme (SEIS), the funding landscape can seem a little bewildering at first.  If even one piece of information benefits you and your business then our time will have been well spent.  If you’d like to learn more, get in touch with an expert on the subject matter like your accountant or financial advisor.