The Tech City Investment Organisation (TCIO) was established in 2010 to attract large overseas companies to the creative Old Street, Shoreditch and surrounding areas and make it a centre of technical and digital innovation.
To encourage this and to attract further inward investment around the UK, the Government has pledged to reduce corporation tax to 22% from April 2014, and introduced an Entrepreneur Visa, allowing people who have great ideas and investment support to easily establish their business in the UK.
Many argue that this focus on attracting the Silicon Valley behemoths to East London has been at the expense of the start-ups and home grown tech companies that were the basis of the creative scene in the area before the moniker "Tech City" was ever coined.
However, other recent government policies have been aimed squarely at the smaller entrepreneurial and start-up business. The Enterprise Investment Scheme was followed by the introduction of the Seed Enterprise Investment Scheme (SEIS) last year.
This allows significant tax breaks for investors in UK businesses; SEIS is the most generous early stage tax break in the world. This scheme is aimed specifically at businesses employing less than 25 people and with a permanent UK base. Also, the increase in the start-up loan scheme announced in January means that the total pot for Start-Up loans will be over £110m for the next three years.
Companies can receive tax credits of up to 225% of their R&D costs and a new Patent Box Scheme coming into force in April 2013 will reduce the rate of corporation tax payable on income derived from patents on technology developed by businesses.
At the end of last year David Cameron announced a £50 million investment into the Old Street roundabout to create a large indoor civic space, dedicated to start-ups and entrepreneurs, providing education, support and further co-working spaces. It isn’t just investment and tax break opportunities on offer either. The Tech City area has always been a close community.
The influx of the global tech giants has brought with it an increase in knowledge and opportunity within the Tech City cluster. The number of hub and co-working spaces that are available for start-ups to use and try and develop their ideas has never been higher. Google Campus opened last year creating a seven-storey co-working space and The Trampery, the first co-working space in Shoreditch, is opening four new sites by the end of this year.
All of these offer relatively cheap desk space for start-ups to create and hone their ideas but more importantly offer access to a community of like-minded individuals and mentors who are able to support and fuel their ideas. Office space, funding opportunities and tax breaks are there for start-ups to take advantage of. The nature of technology companies means that start up failures are par for the course, but government support and a developing community in Tech City means that there has never been a better time to grasp opportunity.
Michael O’Brien is a partner in the technology group at Reeves accountants and business advisers.