Microculture: Why Shoreditch, London Is One of the World's Largest Centers for Innovation

Fawn Fitter

The Silicon Roundabout In Old StreetWhen tech startups began to congregate around the Old Street traffic circle in East London’s Shoreditch neighborhood, they weren’t put off by the graffiti-covered buildings or the tangle of vehicles that regularly send bicyclists to the hospital.

Drawn by an irresistible combination of low rent and proximity to central London, they cross-pollinated so fast that the area soon picked up the jokey moniker, Silicon Roundabout. Government initiatives to encourage growth soon gave the area a more official title: East London Tech City.

TweetDeck
TweetDeck

Today, the neighborhood boasts the third largest concentration of startups in the world, following San Francisco and New York. Among them have been TweetDeck, maker of an app for posting tweets and managing followers that Twitter acquired for US$40 million, and Last.fm, a streaming music site that CBS purchased for US$280 million.

According to the Web site Tech City Map, nearly 1,500 companies call the area home. Not all are early-stage businesses in their incubators. Big names such as Cisco, Google, Amazon, and Intel have arrived to fund workspaces where they can nurture potential acquisitions. Supporting players, such as KPMG and Barclays, are on the scene offering tax advice and financial services, hoping to encourage and profit from the entrepreneurial ferment.

tech_city_map_1

Cory Doctorow
Cory Doctorow

According to research by the London School of Economics and Political Science and the National Institute of Economic and Social Research, the number of digital economy jobs in the area climbed by 12.7% in just one year, to 18,679 in 2013.

This speedy growth is having unintended consequences, though. As writer and futurist Cory Doctorow pointed out in 2014, Tech City is pricing out the bootstrappers. Shoreditch was appealingly affordable when the neighborhood had a high crime rate and low broadband penetration. But success drew the pop-up shopping center made from reclaimed shipping containers and the outdoor movie theater with inflatable hot tubs. Then came plans for commuter rail service and luxury high-rise condos.

Now the old brick warehouses that rented for £20 a square foot just a few years ago are going for two to three times as much – if they haven’t been torn down for shiny high-rises that rent for £1,000 a square foot.

Hannah Donovan
Hannah Donovan

Gentrification drives out the creative people who have big ideas but small budgets. It happened in Brooklyn’s Williamsburg and San Francisco’s Mission District, and it may be rolling over to Silicon Roundabout next.

Hannah Donovan, cofounder of Last.fm and music startup This Is My Jam, told The Guardian, “When we found a new music-focused studio in Haggerston [a still-gritty neighborhood northeast of Shoreditch] that had the energy we were looking for – and cut our rent in half – it was an easy decision to leave.”


Fawn Fitter

About Fawn Fitter

Fawn Fitter is based in San Francisco, where she writes about the spots where business and technology intersect.