THE FIRST few months of 2014 have been a whirlwind for London’s tech sector. Just-East burst onto the stock market with a £1.5bn valuation, DeepMind and Natural Motion were acquired for a combined £720m within three days of each other, Circassia completed a £200m public offering, and we witnessed a resurgent IPO market. Yet while falling share prices have led to fears of another tech bubble, the truth is rather different. We are seeing an extraordinary rise in confidence that could be the start of a golden era for London technology.
First, however, it’s important to note why this isn’t a repeat of the dot com bubble. As Goldman Sachs argued last week, the differences between 2000 and today are more important than the similarities, with companies now generating serious revenue and the online market established.
To truly silence the critics, tech must deliver on its promise. This is where London should excel. Beyond the headlines, a host of emerging businesses are on the cusp of explosive growth. The likes of DueDil, Funding Circle, Unruly and TransferWise are leading the charge in London, but new startups like YPlan and Quill have enormous potential too. The capital’s tech sector is young, but the future pioneers are getting ready.
However, London faces pitfalls. Shortage of talent is the single biggest problem, as the gap grows between available skills and technology’s requirements. It is incomprehensible that vacancies at tech companies are rocketing even though unemployment remains elevated. The result is the slow strangling of rising startups. A report by GfK last year found that 77 per cent of London tech businesses felt they could grow faster if there were more skilled people available, with almost half saying a shortage of skilled workers was their biggest challenge.
This is exacerbated by immigration legislation, which continues to keep vital developers and experts out of the country. Take SwiftKey, a rising software company that is revolutionising predictive typing. Its employees speak tens of languages. But it can take months for such companies to get through the visa process and hire highly skilled migrant workers. In the tech world, this is often too long.
The most successful technology companies are global in ambition, scale and personnel. London is renowned for being an international city, but complex laws and expensive processes are forcing the best experts to consider working elsewhere.
The next year is crucial for London’s technology industry. This month, Tech London Advocates conducted a survey of its members, containing some of the finest minds in government, technology and business. It indicates a clear roadmap for the capital: put technology at the heart of education, allow the flow of talent across borders through a Tier 1 Exceptional Talent Visa for technology, and support the companies that could define London tech.
In 2014, London is on track to take its place at the centre of the world’s technology industry. But failure to address these issues will leave the sector grievously hamstrung. The stakes have never been higher, but the emergence of London as a global tech hub is getting tantalisingly closer.
Russ Shaw is founder of Tech London Advocates.