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London Tech Scene Overflows Into 'Clockwork Orange'

April 22, 2013

East London Goes Tech

Traffic moves around the Old Street roundabout in the area known as London's Tech City in London. Google Inc. opened its seven story Campus, a "co-working space" for tech entrepreneurs and startups in East London. Photographer: Chris Ratcliffe/Bloomberg

In East London's Shoreditch, an area once better known for poverty, the murders of Jack the Ripper and the Victorian gin epidemic, it's now tech that rules the streets.

Hundreds of startups including dot the district. Entrepreneurs, programmers and journalists network in hidden members-only bars. And Prime Minister David Cameron can be found making speeches in the neighborhood about the importance of innovation for Britain’s future.

While that's a good thing for East London, which wants to become Europe's Silicon Valley, there's a flip side: The area has become so popular that new, cash-strapped startups are having a hard time finding office space. And that is forcing entrepreneurs, who rely on networking with others to develop ideas, recruit talent and raise money, to seek residence away from the center of activity.

“There was just nothing,” said Matthew Gunn, an entrepreneur who became frustrated looking for space in East London. “It wasn’t just about desk space. You don’t get the ability to bounce ideas off of like-minded people.”

Growing your own Silicon Valley can be tough when you don't have the real estate of a valley to build upon. And the constraints of space in an urban setting -- especially a pricey one in London -- can limit innovative newcomers wanting to become a spoke in the tech hub.

That led Gunn and his partners to form SW Startups, which plans to offer office space and tech-community events to entrepreneurs who are based below the River Thames or nearby.

They’re currently looking for space in Wandsworth, an area in the southwest corner of London probably best known for its prison, which held the author Oscar Wilde and was used in filming the notorious Parkmoor prison in Stanley Kubrick’s "A Clockwork Orange."

Gunn hasn't leased a building yet, but that hasn't stopped 16 companies from making offers for desk space through SW Startups, while another dozen are on the waiting list.

The eastern part of the city has traditionally had some of the cheapest neighborhoods. But with tenants such as Skype, which took 88,801 square feet in East London and Google Inc., which will move its U.K. headquarters into 863,000 square feet near the Kings Cross train station, rent is climbing as the supply is dwindling, according to a report from Jones Lang LaSalle.

Others are moving out of the East London hub because the startup scene has gotten so big that entrepreneurs are dividing themselves up into industry neighborhoods, said Eric van der Kleij, the former CEO of Tech City, the government-backed investment organization for East London’s startups.

Canary Wharf, London’s refurbished docklands which have become a haven for investment banks, has also begun attracting tech companies in search of easy access to financial clients.

Van der Kleij’s Level39, a company that claims to be the largest accelerator space for finance and retail technology startups in Europe, has taken out space at One Canada Square, an 800-foot-tall skyscraper perched in the middle of the development in a bend in the Thames.

His feeling about the space crunch? It's a problem, but a good one to have.

“We’re facing the challenges of growth compared to a lot of Europe which is facing the challenges of contraction,” he said.

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