UK tech firms see benefit from multiple clusters

London: Droplet, a fast-growing mobile payments business, is a darling of Birmingham’s tech start-up community. Steffan Aquarone, who hit on the idea over coffee with his co-founder, Will Grant, is a big advocate of the West Midlands city as a venue to build business.

He believes Droplet has succeeded both because of where it is based and because of the connections it has with other British cities. This includes hiring staff from Edinburgh and Bournemouth. Droplet has now opened a second office in Shoreditch, London’s tech start-up hotspot.

Droplet illustrates the way successful start-ups benefit from both strong connections to one place and the ability to build networks with others.

It is something that successful exporters need to embrace by looking overseas, but British start-ups are also finding a value in networking with other city clusters around the UK. The entrepreneurial map of Britain has become a cluster of clusters, from Aberdeen to Bristol, from Liverpool to London.

Travel between urban centres is relatively easy — London to Cambridge, for instance, can be completed in 45 minutes by train. It makes the UK not so much another Silicon Valley, based in and around one area, as an alternative to California, where different cities provide separate centres of expertise.

The US state has its tech centre in San Francisco and an entertainment cluster in Los Angeles. The UK has gaming companies in Birmingham, music enterprises in Manchester, and fashion and financial services businesses in London.

Iain Moffatt, head of UK regions for KPMG, says: “London should not aspire to be better than Silicon Valley. If it does, it will fail. Silicon Valley has a history that is not replicable. What the UK does have is its own set of circumstances covering the business environment; its role as a centre of excellence in financial services and in the creative, marketing and advertising industries; and its geographic position spanning east and west. If we are to cement our status as a European hub for entrepreneurs, we need to take better advantage of these.”

While British cities fight for recognition as hotspots for start-ups, those starting companies tend to see the value in keeping a foot in several locations. Spencer Gallagher is a non-executive director for several UK-based entrepreneurs and runs networking events all over the country through The Agency Collective, which helps creative agencies connect.

“I have found that it’s easy for people to network in London, Manchester and Edinburgh, but after that, cities have mixed results,” he says. “Some regions are deeply sceptical of each other. The biggest barrier for regionally based agencies is the cost of travel and hotels. We are looking for agencies to join together to rent houses, to help manage spiralling hotel costs.”

Calum Brewster, northern director of Barclays Wealth & Investment Management, says: “Today’s UK entrepreneurial landscape is very different from that of 10 years ago; successful start-ups can be made anywhere, whether you’re in Oldham or Old Street.”

For Aquarone at Droplet, basing a company in multiple locations makes sense. His connections go beyond the UK as he seeks to move into markets around the world. “It is all about competitive edge,” he says. “The argument about whether it is better to be in Birmingham, or London, or both, is a bit parochial when we are building products that we want the whole world to use.”

— Financial Times