A London Startup Manifesto
Ideas for the next Mayor of London
This week Londoners go to the polls to elect a new Mayor. Only the third in London’s history, the next Mayor will inherit one of the world’s digital and entrepreneurial capitals.
London is home to world-leading startups at the cutting edge of artificial intelligence, fintech, ecommerce, adtech, medtech and more.
The choices the next Mayor makes — on housing, transport, regulation, skills, and connectivity — will shape the future success of this thriving digital economy.
While not a fully formed Manifesto as originally envisioned, here are some of the ideas we hope the next Mayor will consider to support London’s digital startups. It was informed largely by a series of roundtables Coadec hosted with figures from across the startup community earlier in the year. It is also my parting shot before I leave Coadec for pastures new.
Recommendations
The next Mayor of London should:
- Raise the ambition for, and become a champion of London’s digital economy
- Create a more digital, innovative, City Hall
- Tackle cost of living issues that threaten London’s creative future
- Invest in London’s digital skills
- Improve connectivity across the City
- Help startups get funding to scale
- Beyond their formal powers, champion London as a city open to the world (including promoting high skilled immigration and remaining in the EU)
(NB these are broad headings, and on their own rather platitudinous; keep reading for more concrete measures on how to achieve each)
The starting point
London is the best place in Europe to launch and grow a digital business.
Home to 328,000 digital tech jobs, at least 13 ‘unicorns’ (privately held tech companies valued at over $1 billion), and digital output worth £35.9 billion, London sits at the heart of the UK’s thriving digital economy:
- There are more top ranked coders in London than in either San Francisco or New York
- London ranks 1st out of 35 cities in Europe for both startups and scale-ups
- London startups raised more than $2.2 billion in investment during 2015, up from just $100m in 2010
Thankfully, all the of the major candidates for Mayor have recognised the importance of technology and startups. The candidates took part in a DebateTech event back in February, and have made various commitments to support the startup ecosystem.
But…
London faces big digital challenges, and other cities are trying to catch up.
Soaring office rents are pushing startups out of traditional clusters. In the second half of 2015, the number of tech companies near Old Street roundabout fell by 10%.
Broader cost of living concerns on housing and transport are making London less attractive for young companies and teams, especially compared to growing startup hubs in cities like Berlin and Lisbon. This was a common theme at the roundtables we held.
London’s success leads to a battle for talent, with challenges finding the right employees near or at the top of most lists of concerns. This is exacerbated by tightening of non-EU immigration, as well as the risk of potential Brexit.
So there is plenty for the next Mayor to be getting on with…
Here are our recommendations:
1) Raise the ambition for, and become a champion of London’s digital economy
First and foremost, the next Mayor should be a champion for London’s digital economy.
Since 2010 the national government has been a strong champion for the UK’s digital startups, with leadership from the Prime Minister and Chancellor of the Exchequer.
Some of the government’s greatest achievements in the digital space has been through the use of its soft-power to champion UK digital success. For example, this can be seen from the Pitch10 events in Downing Street, from the establishment of TechCityUK, from the inclusion ‘Innovation is GREAT’ in the GREAT campaign, and from taking startups on trade missions.
Indeed, during the 2015 election campaign, David Cameron said ‘I want this to be the startup nation in Europe and one of the great startup nations of the world’.
The next Mayor of London should have a similar ambition. As the devolution agenda progresses, the next Mayor will be the strongest in the city’s history. They will wield a greater budget (including far more skills funding) and more powers than ever before. Importantly they also can exercise enormous soft power to influence both the London boroughs, the national government, European institutions, and even international counterparts and investors.
How they set their priorities will shape the future of the city. It’s vital that London’s digital economy, and startup community, is part of this.
In practical terms this could include:
- Setting out a roadmap to boost London’s digital economy (New York did a similar thing in 2011 and 2013), within the new Mayor’s first 100 days in office
- Committing to take digital entrepreneurs on every trade mission
- Boosting funding to London and Partners (the trade promotion organisation), and prioritising its digital economy work
2) Create a more digital, innovative, City Hall
In order to deliver on the previous recommendation for an increased ambition, we first need serious change within City Hall itself.
The next Mayor should appoint senior advisers (and ideally even a Deputy Mayor) responsible for leading this agenda. This worked for Downing Street, where a succession of advisers like Rohan Silva, Daniel Korski, and John Gibson have driven change across government.
This will probably include a Chief Digital Officer, something now accepted by most of the candidates, who can be an advocate and convener for London’s digital sector on the model of New York’s CDO. This should be a high profile figure who can command the respect of London’s digital community.
The next Mayor also needs to ensure that digital entrepreneurs are represented across City Hall’s decision making processes, for example on the new Digital Skills Board which is to allocate at least £5m of funding. Another example would be instituting ‘Tech City breakfasts’ as seen at No10, where entrepreneurs were routinely invited in to Downing Street to meet with senior officials and even the Prime Minister.
Beyond simply creating means to champion and improve policy for the digital economy, the next Mayor should also improve City Hall’s own digital capabilities.
As Eddie Copeland has compellingly argued, the next Mayor should create an Office of Data Analytics led by a new Chief Data Officer.
As well as changing the way that citizens consumer public services, this also creates the opportunity to unlock innovation in the private sector. Already government open data and APIs allow innovation by third parties, including the creation of digital businesses like Citymapper (built on TfL data). The ambition for Government as a Platform should go further, allowing the creation of an app layer on top of public services.
The next Mayor should look at how they can bring innovators into City Hall. One candidate has already suggested using challenge funds — promising a £1m annual ‘Mayor’s Tech Challenge’, providing data, and inviting businesses to try to solve some of London’s challenges
Another mechanism which may be worth considering is the Presidential Innovation Fellows in the US, which brings leaders from the tech and innovation community into the heart of government. The UK should learn from these examples and make a renewed effort to attract technologists to public service.
3) Tackle cost of living issues that threaten London’s creative future
This is a cross-cutting issue that certainly impacts a far wider population than just London’s digital startups, but cost of living repeatedly came up in the roundtables we held earlier in the year as a major threat to London’s digital future. Simply put, if young companies can’t afford to launch and grow, they will move elsewhere.
Affordable, and notably flexible office space remains a challenge for stratups that are unable to sign traditionally long commercial leases. Tech City UK’s Tech Nation 2016 report found that 38% of digital companies found access to commercial property to be a challenge.
This is not just a matter of prime office space, but also broader housing and transport costs. Digital startups tend to hire young, ambitious staff, and pay below-market salaries (making up for this by offering equity in the business). In their early days, many startups are ‘bootstrapped’ and operate on a relative shoestring until they start generating revenue, or raise external investment from angel investors or venture capitalists.
It is not really within Coadec’s scope to offer recommendations for how to solve the housing crisis, but we hope the next Mayor delivers on the promises made by all of the candidates to take serious action.
Where we feel more confident making a recommendation is on affordable office space. The next Mayor should examine the experience of Islington Council, which has used its planning powers to mandate that commercial property developments must contain ‘affordable workspace’.
Similarly the Mayor should limit the use of permitted development for office to residential conversion, to help preserve the stock of commercial properties.
The Mayor could also continue schemes such as the London Regeneration Fund, which put £20 million towards creative, affordable workspaces — including co-working space for startups and maker spaces.
The Open Workspace Agenda, a movement backed by various creative and co-working spaces, has more good ideas.
4) Invest in London’s digital skills
Throughout our roundtables, finding the right talent to allow startus to scale was a recurring theme.
Unsurprisingly, it often tops polls of issues for entrepreneurs. The Tech Nation report listed it as the top challenge faced by the UK’s digital companies, cited by 43% of companies. Similarly in Coadec’s Startup Manifesto survey in 2014 over 60% of respondents listed access to skill as one of their most pressing concerns, while Tech London Advocates found that 70% of advocates believed that a lack of talent was holding back London’s startup growth.
While all forecasts of the future skills need should be treated with a pinch of salt, research last year suggested the UK would need 2.3 million digitally skilled workers by 2020 to satisfy the UK’s digital potential. And whatever the actual number, there is broad agreement that policymakers need to up their game. As the Chair of the House of Lords Committee on Digital Skills concludes: ‘We are at a make-or-break point for the future of the UK — for its economy, its workforce and its people.’
Interestingly, Tech City’s Tech Nation report, which asked where companies sourced their workers and where they gained their skills found that self-taught, in-house, mentoring and online training were the most important sources of skills:
This makes sense, as those leading sources of skills listed are likely to be far more responsive to individual business needs than a largely inflexible, more academic, and potentially out-dated university or other provider.
From a policy perspective, this means that in order to improve the supply of digital skills the next Mayor should be working to support in-house and self-taught training.
We recommend that more support is provided to adults looking to change career into the digital world, including through innovative providers like Makers Academy and General Assembly, who offer intensive ‘bootcamp’ style learning in fields such as web development and product management. This could take the form of subsidies, better loan offerings, and better signposting (eg from careers services, and jobcentres).
As the government is trying to increase the number (and quality) of apprenticeships, the next Mayor should campaign to ensure that there are suitable apprenticeship schemes for startups and scale-ups. Some funding raised from the new Apprenticeship Levy should be invested in improving the quality of training, and providing incentives to high growth tech companies to take on apprentices. We heard from some of the more innovative training providers (as mentioned above) that they would need an increase in the flexibility of the rules to be able to fit into the formal systems.
For example through the better provision of apprenticeships, sign-posting (and perhaps subsidising) online training providers.
The next Mayor will have have control of adult skills funding for the first time, they should work with innovative providers of digital skills like Makers Academy and General Assembly.
Finally it’s vital that digital and startup voices are heard in the policymaking process, so there should be startup representation on London’s new digital skills board.
5) Improve connectivity across the City
London lags behind many competitors on connectivity— for example in the European Digital Cities Index, while London is top ranked for startups broadly, it ranks 12th for digital infrastructure.
For startups a common concern is the length of time it takes to install new connectivity in an office. It’s welcome that most of the campaigns have agreed that the next Mayor should work to standardise the ‘wayleave agreements’ that commercial landlords grant to tenants and to install connectivity.
Similarly it is welcome that some candidates have said they would use the planning system to mandate connectivity in new developments. Currently there are only very limited requirements to require that ducting for fibre is included in new builds.
We hope the next Mayor delivers on these promises. If they wanted to go further they could look to increase the transparency of local authorities on granting permission for works involving connectivity; this could be used to create league tables and exert pressure on poorly performing councils.
6) Help startups get funding to scale
The environment for funding in London has changed hugely since the current Mayor took office. London startups raised more than $2.2 billion in investment during 2015, up from just $100m in 2010. But there is still a role for the Mayor to help, both by helping to fill funding gaps, and by using their soft power to convene and champion.
For example, while the number of pre-seed and seed investment deals went up by around 10x between 2010 and 2014, the number of Series A investments went up by only 1.3x.
To help hope the next Mayor builds on the success of the London Co-Investment Fund, a £25 million fund that co-invests in seed rounds between £250,000-£1m that are led by one of the 9 chosen co-investment partners.
The Mayor can play a role in convening investors, and should be trying to attract leading VCs from around the world to set up shop in London.
The next Mayor should commit to taking digital startups and scale-ups on future trade missions. These can be a powerful tool, and one that Boris Johnson used regularly (for example a FinTech mission to New York, and a startup mission to Israel). This should include more support for London & Partners.
7) Beyond their formal powers, champion London as a city open to the world
London is a truly global city and its digital economy thrives in large part thanks to that international outlook. The next Mayor should recognise this, and use their soft power to campaign and lobby to make sure it remains the case.
The next Mayor should ensure that London is open to the best digital talent from around the world. Our immigration system should be making it easier, not harder, for entrepreneurs to come to London to launch their digital businesses, and also for digital businesses to recruit top talent from overseas.
This is a common refrain from startup founders, and the general tone of responses to Coadec’s survey on immigration last year was summed up by Hiroki Takeuchi, Co-founder of GoCardless who said that “If the government wants to maintain London’s edge, they should be making it easier not harder to bring talented people to the UK”.
This means the next Mayor will need to work with the Home Office and central government to make the case for high skilled migration, and the benefits it brings to London’s digital startups.
London’s digital startups are also clear that they want the UK to remain in the EU. Coadec’s own survey found that 81% of startups want to remain, with similar results found by:
- TechCityUK: 70% want to Remain
- techUK: 70% want to Remain
- Tech London Advocates: 87% want to Remain
The next Mayor should use their position to campaign for a Remain vote, and then work in Brussels to deliver on policy that works for the digital economy, including delivering on an effective Digital Single Market.
Conclusions
As I said at the outset, the next Mayor will inherit one of the best cities in the world for digital startups. But there are serious challenges, and stormclouds on the horizon (whether competition from other cities, cost of living, or even the spectre of Brexit).
I’m an optimist for London’s digital future, but it will largely depend on how the next Mayor sets their priorities, staffs their team, and delivers on policy over the next five years.
It is reassuring that the Mayoral debate has taken tech more seriously than any previous election, and there have also been great contributions in the Tech London Manifesto and others.
We hope the next Mayor follows through on this in office.
About Coadec and acknowledgements
I’d like to thank everyone who took part in Coadec’s roundtables, our Steering Committee, sponsors and everyone who has supported Coadec’s work in the past, including signing up to our Manifestos and open letters. Any errors or omissions are solely my own.
Coadec is the policy voice of UK digital startups. Set up in 2010 by tech entrepreneurs, The Coalition for a Digital Economy (Coadec) is a non-profit that campaigns for policies to support digital startups in the UK.
Our supporters include digital startups and entrepreneurs, developers, VCs and angel investors, technology companies and academics. Coadec is sponsored by iHorizon, Intuit, Google and TechHub.
To find out more about our work please, visit www.coadec.com.
