The UK, notably London, has become an attractive location to start a business. Over the entire UK, the number of startup businesses has been growing rapidly, raising the number of businesses nationwide from 440,000 in 2011 to over 525,000 in 2013. Even more interesting is the fact that micro- and small businesses now account for 95% of all registered companies and employ over 7 million people in the UK. While growth of new business has been strong regionally, even in regions with moderate economic growth over the last decade such as Scotland, Yorkshire, and the Midlands, the hub of UK startup activity is, quite naturally, London, which is home to approximately 130,000 startups.
Though it is understandable that the nation’s entrepreneurial epicenter leads the UK in attracting new businesses, it is important to understand what exactly makes London’s startup scene different from its closest competitors in Europe. Let us compare London to Berlin’s dynamic startup scene for a moment.
Though the phrase “it’s all about location” may be a cliché, especially in a mobile and globalized world, it still holds very true in the startup universe. Being one of the “newest” cities experiencing a tech startup boom, Berlin has an advantageous local environment that features cost of living rates (and cost of doing business) 40% below London. Conversely, London’s more developed and expensive flair is not always considered a drawback. Interestingly, some view it positively and consider London’s exclusiveness a means to attract more mature, profit-oriented business.
As any businessperson knows, nothing happens without capital. While both cities attract their fair share of investment capital, there are noticeable differences in startup funding between the two. Berlin is only beginning to grow a sizeable local investment capital market. The majority of Berlin’s startup funding therefore comes from government subsidies. London’s developed local capital markets on the other hand are the main drivers of its startup scene and produce a return-driven startup investment environment.
The final tangible difference between the two startup scenes lies in the scene itself-or the companies who shape it. With its global reach, capital, and history London has been able to attract big market players, such as Google, Qualcomm, Amazon, Intel, Cisco, and Facebook, all of whom have a presence in East London’s Tech City. While this definitely makes a positive difference as far a real-world practicality and market-based usefulness is concerned, startups do have to compete with those power players. While the prospect of trading your place on the couch of a small a startup for a desk at Google is very exciting from an employee perspective, many owners dread the high turnover rates and the constant loss of talent that comes with proximity to big name competition.
Clearly, each individual startup scene has its own distinct identity. But for those seeking the assistance of powerhouse companies, a truly global city and real, local market funding, there is no better location better than London.
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If you are a startup with an office in London or looking to enter the UK startup scene, arrange a meeting with us at the Business Startup Show on 15-16 May 2014, in London or directly at your office by contacting our UK Business Development Manager Benjamin Beech: phone +44-115-9 64 42 82 or email: benjamin.beech(at)evs-translations.com.