Eric van der Kleij is to depart his post as CEO of the UK’s Tech City Investment Organisation (TCIO) after his two year contract comes to an end this Summer. The TCIO was set up by the UK government to promote East London’s pre-existing cluster of technology startups and is just one of hundreds of similar initiatives around the world where a city is promoted as a ‘tech city’. It’s a natural course to take, given that tech is one of the few economic areas growing during a downturn in developed economies. Even tech-obsessed San Francisco itself is thinking that way.
A TCIO spokesperson told us it plans to advertise the positions “in the next couple of weeks”. Mr. van der Kleij will go part-time from the end of July and steps down formally in September.
TCIO now plans to split his role into two, a CEO and a Deputy CEO. Both positions have yet to be filled. The CEO will be external-facing, promoting the East London hub, while their Deputy will organise events and promote the tech community on the ground in London. Sources told us Mr. van der Kleij had been too stretched trying to fulfil both roles.
A TCIO spokesperson told us: “Eric’s always been clear that he would run TCIO for a maximum of two years. The feedback we had from the community around the Impact Report and the Town Hall meeting has fed into the recruitment strategy and the type of person we’re looking for.”
The strategy for the organization also appears to be more or less unchanged. TCIO will continue to focus on East London.
“There are other organisations such as London & Partners that focus on London as a whole – and TCIO works closely with them. It’s about making sure that businesses set up in the area that’s right for them – whether that’s in Shoreditch or Shepherds Bush,” a spokesperson said.
We asked if Tech City had any comment on whether van der Kleij did a good job or not.
TCIO spokesperson said: “TCIO met its targets last year but there’s still a lot more to do – and it can do what it does better as well. In its first year, it was about getting companies to come to Tech City – now that effort will be focused on those companies that will benefit the existing ecosystem. That may be focusing on areas such as smart cities, fintech and digital-creative.
“The emphasis has always been on helping support and accelerate the cluster’s growth through attracting foreign direct investment, introducing investors and supporting the companies already in the cluster with international expansion and through mentoring etc to help them scale up.”
So comes to an end an interesting two years of Mr. van der Kleij’s tenure.
The TCIO was created in March 2011, following Prime Minister David Cameron’s announcement the previous November of the Tech City initiative in the ‘Silicon Roundabout’ area of East London. The organisation was created by Number 10 Downing Street as a subsidiary of the UK Trade and Investment (it has sometimes inaccurately been described as a QUANGO).
The ‘Silicon Roundabout’ phrase was coined on Twitter as a joke by engineer Mat Biddulph and by his own admission was never intended to become a ‘brand’ as such. But Biddulph did hit the zeitgeist at the right time, since the area stretching East from the Old Street Roundabout was indeed cheap enough to create a startup in, but still close enough to the centre of London to make sense business-wise.
It’s widely accepted that East London does indeed have the largest single cluster of London’s internet startup companies based on several surveys. However, the TCIO has been criticised for lumping creative and design companies in with genuine technology companies and engaging in too much ‘success theatre’.
Thus, it ended up claiming around 600-800 “tech” businesses in the area. To give that some context, the whole of San Francisco city currently houses over 1,500 (real) tech companies and the industry employs more than 30,000 people.
The TCIO’s figures were in contrast to an independent survey last year which put the figure for high growth, technology oriented companies for the whole of Central London at 250 (this is not including financial tech companies in the Square Mile). Having said that, the study did confirm the largest cluster was indeed in the East of London, and proved it with a map.
In May the TCIO published its first Impact Report reviewing its activities and achievements against objectives for the 2011-2012 fiscal year.
TCIO has three roles: To secure foreign investment from tech companies into East London; to engage with overseas VCs and help them get deal-flow; and to support the cluster and raise its profile internationally.
In broad terms only a curmudgeon would say it’s done nothing at all, since to most observers it’s managed to do at least something in all three of those roles. The detail of its achievement however is not exactly amazing, and shows the problem of relying largely on a small organisation to hit all three of its – rather ambitious – targets.
It also brought 15 overseas VCs partners, 29 VC firms – but only four of these firms then participated in November’s Entrepreneur’s Festival, set up by TCIO. The organisation admitted “there is more that can be done to help overseas investors access deal-flow in the cluster.” It now plans to create 50 investor pitches for Tech City companies and attract three overseas investors to establish investment facilities in Tech City.
It organised 30 events in the UK and abroad, hosting a bootcamp with over 80 mentors. However, only three mentors have continued their relationship with Tech City companies as a result.
Critics might point out that this entire process ought to be left alone to happen as market conditions dictate. After-all, most London-based VCs choose either to base themselves in the Square Mile, just south of the Tech City area of Shoreditch and eastwards, or close to the Private Equity houses in Mayfair.
Then again, creating the Tech City brand has clearly had resonance internationally, some of which I’ve actually witnessed myself in places like New York, San Francisco and elsewhere.
It’s also clear that having an organisation beating the drum for tech startups in a cluster has had other effects nationally. Rather like a trojan horse, the whole Tech City initiative has ended up letting tech entrepreneurs into the heart of the UK government’s policy-making unit. This has lead directly or indirectly to changes in national policy, for instance on entrepreneurs visas, new tax breaks of Angel investors (SEIS), and several other initiatives.
I spoke to sources inside Number 10 who was insistent that the TCIO would continue to focus on East London, while working in concert with London-wide organisations like the Mayor’s office and London & Partners, which promotes London generally as a business destination.
But has the East London focus had it’s day? Yes, the biggest single cluster is in the East, but it’s also clear that there are startups all over London. Lately I’ve notice clusters developing in West London and also around London Bridge in the South. Ask the guys running the business outreach department in New York City if they emphasise Manhattan over New Jersey for instance, and they just shrug their shoulders – “We don’t care where you put the company, so long as it’s in New York” as one official told me.
But my Number 10 sources admitted that the East London focus would remain. However, one said: “The TCIO’s focus on Tech City acts as a door-opener. Sure, a company may not end up in the East, but it’s a way of opening the conversation in the first place.”
Whatever the case, Tech City’s £1.7m annual budget looks on the large side when most of it’s role seems to be PR. It has also been criticised for spending £55,000 on a lack-lustre web site which probably could have been created for far less.
However, the reality is that the Tech City project is operating in a global context and competition with other cities is fierce.
While Google bought a 10 year lease on a seven story building in Shoreditch (Google Campus) and stuffed it with accelerators and co-working spaces, it’s also recently bought the tallest building In Dublin For $136 million.
Indeed, San Francisco is getting so concerned about global competition for tech clusters that, ironically, it’s started to realise it must start helping the tech industry. I bet you never thought San Francisco would actually even bother to think that way.
So whatever happens to the UK’s Tech City project, whether it’s spats in the tech-sceptical British press about its funding or staffing or strategy or whatever – it’s clear that entrepreneurs, startups and engineers the world over are being wooed on a global basis.