London’s Tech-City


Since the late 1990s, a vibrant high-tech scene has been developing in Inner East London. The neighbourhoods around Clerkenwell and Shoreditch form the core of this cluster, with the Old Street roundabout – also called ‘Silicon Roundabout’ – at its heart. Since 2010, the Coalition Government has led a high-profile drive to accelerate its economic development – the ‘Tech City’ initiative. Launching the strategy in November 2010, and drawing heavily on the imagery of Silicon Valley, David Cameron set out an ambitious agenda to develop Inner East London into ‘one of the world’s great technology centres’1. By March 2012, George Osborne was hailing Tech City as central to the UK Government’s industrial strategy2.

Ministers are right to get excited. Inner East London plays an important role in the capital’s digital ecosystem. In recent research that I led for the Centre for London (CFL)3 we found that on a broad count, the cluster contained over 3,200 digital economy firms in 2010 – double the count of 1997. That business base is particularly strong on digital content industries, and now includes global players like MindCandy, Unruly, Songkick and The area also contains over 48,500 digital economy jobs, increasing its share of London’s tech employment by a third since 1997 – and in 2010 it continued to gain jobs while digital economy employment in the rest of the city fell.

With the area approaching critical mass, policy and industry voices are starting to think about the next phase of Inner East London’s digital evolution – a corporate invasion? 3D printing, and a revival of manufacturing? This article explores a third scenario – the development of a smarter, greener core. The area has been quietly hatching a number of ‘cleanweb’ firms, and has the beginnings of a green ecosystem, with networks, meetups and accelerators in place. Over the past year, angels and venture capital (VC) players have been picking up interest. But as with London’s wider digital economy, there are real challenges ahead.

Smart city, clean tech, cleanweb

Terminology matters here. Precise definitions of the ‘smart city’ are elusive, as LSE’s Ayesha Khanna points out. For some it’s a city that uses advanced technologies to manage energy, lighting and transport infrastructures more efficiently. For others it’s a city that places the minimum demands on the environment. In practice, it’s probably both. Certainly, the smart city agenda is driven by the diffusion of new digital technologies and systems (broadband and mobile broadband, cloud computing, big data and the social web). It’s also driven by urbanisation and by the challenges of updating and retrofitting urban infrastructures, and by policymakers’ increasing awareness of limits on current economic development paths. As the world develops more cities, especially in the Global South, we need to find more efficient and more sustainable ways to help them run.

We also need a sense of the smart city product space. Paul Miller, of Bethnal Green Ventures, talks about ‘cleantech and cleanweb’. Cleantech is the physical green economy – involving electric and driverless cars, smart grids, smart meters, PV cells. Cleanweb is online technology for information and organisation – crowd-sensing apps and maps, environmental information, online marketplaces. These aren’t always wholly distinct: US firm SolarCity, for instance, offers design, installation, finance and online monitoring of domestic solar energy systems.

On the ground, two very different versions of the smart city are appearing. Carlo Ratti and Anthony Townsend dub these ‘top down’ and ‘bottom up’4. Top down smart cities are masterplanned demonstration projects – think Masdar in Abu Dhabi, or Cisco’s ‘city in a box’ in Songdo, South Korea. Bottom up smart cities are messier, more complex, building and retrofitting new services on top of existing social media networks and technological infrastructures. For a city like London, it’s this social, citizen-powered approach that’s most likely to take off. London faces multiple challenges: a growing population, overloaded transport systems and an energy-inefficient housing stock. But it is also developing smarter systems – such as the congestion charge, the Oystercard and ‘Boris Bikes’ – which offer glimpses of how a smarter capital might work in the future.

Cleanweb products and services, which focus on making existing infrastructures work better, are particularly attractive for London policymakers. And London’s digital businesses, with their strengths in web design, apps and digital content, are well placed to develop new tools and ideas.

Going green in East London

Over the past five years, a green layer has gradually developed in the East London digital scene. These firms are mostly very small and very young, and are operating in both cleanweb and social smart city product space. Some offer online apps and tools – such as Carbon Culture5 (a community platform to engage people in saving energy), Gnergy6 (web apps to assess and improve energy performance) or Pad Partners7 (using social networks to source home energy efficiency advice). Others have developed green transport marketplaces, like Carbon Voyage8 (online car sharing and journey matching) and Loco2 (pan-European train booking). A third group are more focused on hardware and systems, such as Cosm9 (a platform to connect smart devices like energy monitors), Fairphone10 (an ethical mobile) and Mastadon C11 (greener cloud computing, which sends work to the most energy-efficient location).

Amee12 is, arguably, the daddy of East London’s cleanweb scene. Founded five years ago, the firm now has 13 staff and offices in London and San Francisco. Amee offers a combination of aggregated environmental information, carbon/energy audits and data/tech management consultancy services. Amee was the first of the scene’s cleanweb firms to get major VC investment, and is now helping to seed the next generation: founder and chairman Gavin Starks is now Chief Executive of the Open Data Institute, and Amee alumni are involved in the London Cleanweb network – ‘because we don’t want to bluescreen the planet’ – which organises meetups, talks and hack days13.

Such social infrastructure is an important part of the local ecosystem for young firms. Bethnal Green Ventures (BGV) is another14. An accelerator for social/environmental start-ups, BGV offers a combination of seed funding (GB£15,000 / US$23,877 per firm), a peer group, structured networking and mentoring, as well as shared workspace at Google Campus. BGV is increasingly in demand – working with six firms at a time, the group interviewed 50 candidates for its latest cohort, and expects to see more in the next round.

BGV’s Paul Miller notes rising angel and VC interest over the past 12 months. The Tech City initiative has shone a bright light on the area; more importantly, variable experiences with cleantech investments have pushed many US investors towards cleanweb, where capital requirements are lower and returns potentially higher.

The future

So what next for East London’s nascent green economy scene? London’s cleanweb firms feel well positioned. Their great shared asset is the collective knowledge and resources of the wider urban digital economy. Cleanweb activity in particular builds on London firms’ skills in programming and digital content – perhaps more than physical engineering. As far as East London goes, cleanweb goes with the grain.

The next few years won’t be easy, however. Many of the challenges are common to all digital start-ups: the CFL research identified problems around skills, finance, workspace, connectivity and mentoring that may prevent firms growing to scale. Even so, green digital economy firms may have it harder than others.

One challenge is reaching paying customers, both in the UK and abroad. Gavin Starks notes that ‘the main challenge is making environmental issues carry enough financial weight to be relevant to businesses.’ Paul Miller suggests a wider British cultural aversion to ‘buying things off start-ups’ – shared across public and private sectors.

Accessing finance is another issue. CFL found a number of companies bootstrapping, or relying on family and friends. Those who had approached angels or VC for equity had often had disappointing experiences – many providers lack knowledge of digital sectors and are often very risk-averse, problems compounded by VC firms’ lack of physical presence in – and thus knowledge of – the area. These issues are amplified for very novel technologies like cleanweb (Amee, notably, got its first VC money from New York and the South Bay). These constraints may ease in the years to come, as more US investors arrive and specialised VC and boutique operations like Passion Capital, Amadeus and Seedcamp step up operations. The UK’s Technology Strategy Board is also helping out, with GB£1.25m (US$1.99m) on the table for innovative energy-efficient computing ideas and £1m (US$1.59m) for energy harvesting technologies.

A third challenge will be the continued supply of physical workspace. Shoreditch and Clerkenwell are dense urban areas, with limited space for new building. Tech City has brought welcome attention, but is also contributing to rising property costs. Many policymakers hope that digital firms will migrate to brand new spaces in the Olympic Park, Stratford City and the Royal Docks. The iCity development, on the former Olympic Broadcast and Media Centre, is hoping to attract a mix of major players and start-ups. Siemens’ The Crystal exhibition centre is intended to kick-start a Green Enterprise District. No doubt some firms will head further East, but many have little interest in doing so. At present, there are certainly few obvious connections between the grassroots cleanweb scene around Shoreditch, and shiny new buildings further East.

A fourth big issue is the policy environment. As with many frontier technologies, this kind of activity needs government support – through legislation, enabling frameworks and funding tools. National and local government are both actively focused on the digital economy, although the strategy and policy mix can be improved (see the CFL study for more on this). For cleantech and cleanweb firms, the wider policy environment is also key. The lack of certainty on flagship UK initiatives like the Green Deal, for example, makes life harder for nascent providers, as do ongoing rows about support for renewables. And the failure of the Copenhagen climate negotiations has knocked substantial sums off firm valuations.

Finally, we need to consider the bigger picture. Smart city optimists suggest a new electric age for cities is beginning to appear. As Carlota Perez would put it, cleantech and cleanweb technologies have already arrived, and the next two decades will see a ‘deployment period’, as they become embedded in urban structures15. Pessimists, like Robert Gordon or Tyler Cowen, suggest we’ve already wrung the maximum innovative potential out of the Internet, and those gains have been relatively small16. My personal view is that there’s still great potential for the diffusion of new technologies into smart city products and services. It’s certainly one plausible – and encouraging – possible future for East London’s vibrant digital economy.

The author would like to thank Charlie Allom, Mike Butcher, Andrew Campling, Maria Irurita, Paul Miller, Gavin Starks, Chris Stutz, James Swanston, Georgina Voss and TCIO for their input.

1 Cameron, D. (2010). East End Tech City speech,

2 Osborne, G. (2012). Speech by the Chancellor of the Exchequer, Rt Hon George Osborne MP, Google Campus Launch London, HM Treasury

3 Nathan, M., E. Vandore, et al. (2012). A Tale of Tech City: The future of East London’s digital economy. London, Centre for London.

4 Ratti, C. and A. Townsend (2011). “The Social Nexus.” Scientific American 305(September): 42-48.











15 Perez, C. (2010). “Technological revolutions and techno-economic paradigms.” Cambridge Journal of Economics 34: 185-202.

16 Cowen, T. (2011). The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. New York, Dutton Adult; Gordon, R. J. (2012). Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds. NBER Working Paper 18135. Cambridge, Mass, NBER.

Max Nathan is a Research Fellow at LSE Cities and at the Spatial Economics Research Centre, LSE.