From Uber to LoveSpace, executives from some of London’s fastest-growing companies are gathered over breakfast at one of Workspace’s central business hubs on the South Bank.
With its proximity to Waterloo station and Blackfriars, to the Tate Modern and Shakespeare’s Globe – Cargo Works embodies the Workspace spirit: providing entrepreneurs with a thriving hub in the heart of London. This morning, eight business leaders are debating London’s world-leading start-up and growth scene, chaired by HomeWork magazine’s new Editor, Farah Khalique.
She says, “We wanted to hear from a mix of Workspace customers, fast-growth businesses and those that work closely with the Mayor Sadiq Khan in order to find out the burning issues affecting London’s entrepreneurs. How can companies in the city flourish and what are the benefits of manufacturing and operating out of London?
“The morning was a great success with a diverse range of opinions and the overriding feeling that, no matter what happens in the future, London will still retain its crown.”
Joining her is Jack Beaman, Co-Founder of temporary-staffing app Syft; Andrew Byrne, Head of Public Policy for the UK and Ireland at taxi app Uber; Chantal Coady, Founder and Creative Director of luxury confectionary maker Rococo Chocolates, and Janet Coyle, Principal Adviser at London & Partners, the promotional company backed by London’s Mayor.
With them are Steve Folwell, Managing Director of storage company LoveSpace; Richard Gann, Founder of interior-design business Generate Studio and Rawside Furniture; Ivana Ojukwu, Co-Founder and Chief Operating Officer of fashion designer platform See Fashion; and Nick Royle, Head of the London Growth Network, a programme aimed at helping NGCs prosper.
London’s growing economy
The Capital is experiencing fantastic growth but which industries are ripe for it? E-commerce and fintech rank among the fastest growing sectors in the city’s economy – how do we ensure this continues?
The chief areas of interest for Coyle from London & Partners are technology, life sciences and what she refers to as urban – any product or service a city needs. The technology sector has grown so rapidly that its impact on all sectors is strong. Driving that is a determined talent pool.
“The entrepreneurs we work with in that sector, despite whatever’s been thrown at them... have this incredible tenacity and innovative thinking to work through any challenges,” she says.
For Uber, the poster child for Silicon Valley, London has always had an open door for new businesses, according to spokesperson Byrne. He says, “There’s always been a business ecosystem that means we’ve always felt confident about investing in London for growth.”
He praises the UK government’s focus on fintech as a means to boost economic growth. “We’d like to see more focus on particularly high-growth industries in the UK and London, particularly those to turn into global success stories.”
London & Partners’ Royle agrees that technology is at the centre of the UK’s growth story – more than half of the portfolio companies he works with operate in the sector.
The London Growth Network, due to launch in April, will support international Small and Medium-sized Enterprises and increase their productivity by facilitating collaborations with corporates. In its three-year run it hopes to work with 450 businesses and help create 150 jobs.
“Our new programme is going to help them recognise the barriers to growth, look at those barriers, find solutions, link [them] to mentors,” says Royle.
Networking is undoubtedly crucial to getting a business idea off the ground and London’s scene of founders that achieved success in the 1990s and 2000s is an invaluable resource for budding entrepreneurs.
Syft’s Beaman finds they are extremely keen to back UK businesses and are very proud to be able to do so. Beaman met four or five serial entrepreneurs who took no more than a half-hour meeting to buy into Syft’s proposition. “They were very happy to come in and they take great pride in doing that.”
Coyle has developed a venture capitalist hub to introduce entrepreneurs to investors; she describes her network of venture capitalists and angel investors as “huge”. London & Partners’ efforts appear to be working – it said in its 2015-2016 annual review that over that period it attracted 289 companies to London, leading to 6,337 jobs.
Coyle says, “Despite those political challenges we’re going through we’re still seeing London really opening up.”
London & Partners surveyed 100 companies on scale-up programmes – between them they have raised £57 million in the last six months. “We’re seeing more openness and a rise in serial entrepreneurs who are really backing UK companies.”
The financing opportunities for today’s entrepreneurs are a far cry from the era before smartphones and crowdfunding. Coady of Rococo Chocolates recalls the challenges of securing a bank loan when attempting to launch her own company. Her business plan impressed her lender, but they needed security and suggested she use her mother’s home.
She says, “I went with my tail between my legs and said, ‘What do you think?’ and she said, ‘Okay’. It was a huge act of confidence and potentially disastrous for the whole family and it put the biggest amount of pressure on me to make sure the business didn’t go bust. I would hope people don’t get put into that situation now, and with the different platforms of crowdfunding and other kinds of investment… there’s a huge array of opportunities.”
Meanwhile, the flexibility of temp and freelance workers – the gig economy – is an important source of staffing for start-ups, New and Growing Companies and London’s growth. A report published last year by the Office for National Statistics illustrated a significant trend towards casual work. Part-time self-employment increased by more than four fifths (88%) between 2001 and 2015, while full-time self-employment rose by a quarter (25%) over the same period.
“The gig economy provides real value for people,” says Byrne. “Just having a flexible labour market where people can work and find work easily… it allows people to access the labour market in different ways.”
Employers are competing hotly for the best flexible staff, says Beaman, and key to that is offering the best pay and treatment. He says: “We started from a standpoint of [asking] how much can we pay our workers and at the same time save our clients money from what they’ve traditionally paid? If they look after workers they’ll get access to the best workers.”
In January, Syft partnered with employee-benefits platform Perkbox to encourage their staff to book more shifts through Syft. The initiative involves Syft offering free access to more than 200 perks including discounts at retailers and restaurants, free mobile phone insurance and corporate rates at gyms.
Tax breaks have incentivised self-employment, but this growing workforce poses challenges for the government.
Byrne adds, “How can we make sure those people are taking advantage of the same social safety net and benefits that typical employees are provided with?
How do you make sure they are saving for a pension, saving for a rainy day or making sure their existence isn’t precarious? That’s something that’s going to require businesses, government and organisations like London & Partners and the Mayor’s office to think carefully about.”
London's movers and shakers
London is home to hundreds and thousands of businesses, including at least 3,000 that manufacture in London. After many decades of decline, the city’s global gateway, skills set and eight-million-strong population are contributing to the revival of London’s manufacturing sector.
London’s creatives are a huge part of the resurgence but keeping them in the city, with its cripplingly high rents, is a growing problem. With previous up-and-coming areas such as Shoreditch and Dalston now out of reach for many designers and makers, where else should they look for affordable space?
See Fashion’s Ojukwu says east London had traditionally been a cluster for the fashion industry with designers building a hub by bringing their communities to cheap studios. She says, “They’re looking for another space to grow creatively and be inspired – Camden, Croydon. But speaking to people who work in my area… they’re looking at Tottenham.”
Tottenham’s regeneration, particularly the development of Tottenham Hotspur’s new football stadium – and its links to Liverpool Street station and Stansted airport – make it increasingly popular among creative growth businesses.
Such infrastructure is crucial to building a cluster, she says. Affordable working space is paramount for start-ups on a tight budget. “You can’t afford to pay everyone the salary you’d want to give them. You’ve got to make sure everything’s affordable.”
Croydon is another growing hot spot on the start-up radar, in addition to more traditional locations in east London, like Shoreditch. Croydon Tech City is a growing organisation and community that aims to foster early-stage digital and technology start-ups, a sign that tech companies are branching out in their search for the next up-and-coming area.
Coyle works with companies spread out all over the capital, from central London to Greater London. “We are doing a lot of work in Croydon and other boroughs because there is huge talent there and we need to make sure we can harness that and [support growth].”
Boxpark, the world’s first pop-up mall, was established in Shoreditch in 2011. It successfully expanded to Croydon in October 2016, offering modern street food, fine dining, craft beer and drinks. The growing demand for locally made craft products – of which beer, gin and furnishings are at the forefront – is further fuelling the need to manufacture in London, says Gann, who spends much of his time working and designing from Workspace.
He says, “How can we manufacture something in London where the property prices are so expensive and actually be competitive in our field? You can. If you look at raw materials, machinery, it’s the same across the world. Your only increase is your property cost and your operational staffing cost.”
By being based in London, Rawside eliminates the cost of importing its goods in containers from China. Furthermore, it can proudly tell its customers that they are purchasing furniture designed locally, say in Brixton or Wandsworth.
And the best thing about operating in London? Its size, says LoveSpace’s Folwell. The company benefits from its customers’ small living spaces but sees great opportunity for its own footprint to expand across London. He says, “There’s plenty for us to go at here. We don’t need to cast our net too wide… That’s the dilemma businesses have in London – do you double down here?”
Coyle adds, “It’s that balance of keeping scale in London but if you don’t get out to market globally quickly enough, somebody else will take that.”
Looking to the future
Confidence in talent – and the appetite to invest in start-ups and growth businesses – is high but how strong is London’s position likely to be in the coming years? With Brexit looming, how deep are concerns surrounding London’s status as a world-class business destination?
Brexit has already had a negative impact on business for some. Coady says retail prices at Rococo Chocolates had to increase following the pound’s depreciation because most of the company’s raw materials are priced in euros.
She says, “It’s looking like it’s not getting better… We have a lot of people who come from outside the UK to work with us so there’s a feeling of uncertainty among the workforce of what’s going to happen. ‘Is my future safe in this country or not?’ I feel a lot more confidence in the Mayor than I do in our Prime Minister.”
More than half of LoveSpace’s team comprises foreign staff. Folwell says it doesn’t take much to persuade non-UK talent to move out of the country – anything from high rents, an inhospitable environment to simply “This isn’t quite the right place to be for us”.
Nevertheless, London’s growth is set to outstrip the rest of the country’s over the next decade. The City of London — the financial and commercial heart of the city — alone is expected to grow 2.6% between 2015 and 2025, according to research published by the City of London Corporation.
Attracting and retaining the best developer talent – a large proportion of whom come from the technology and engineering hubs of eastern Europe – is paramount in the technology sector. The government understands that, says Beaman. “You have got to have that faith… the government is not silly enough to put something in place that is going to destroy an entire sector.”
Mayor for a day
We asked our business experts, if you were Mayor of London for a day, what would you do to give entrepreneurs a helping hand?
Chantal Coady: “Eye-watering taxes” on empty properties and five-year leases at a fixed price would help solve London’s affordable-housing crisis.
Richard Gann: An initiative to provide small apartments at affordable rents, which exists in New York, could also work in London.
Nick Royle: Reduce business rates in outer boroughs. Try and grow more clusters in cheaper parts of London to make the city more competitive with the likes of Berlin, where property is cheaper to start with.
Ivana Ojukwu: Encourage greater digital skills within the UK by making tech and digital skills part of the national curriculum.
Janet Coyle: Efforts to nurture entrepreneurship and improve links outside of Europe, particularly with corporates in the US, will stand London in good stead.
Jack Beaman: Put more start-up founders in schools. Teachers are great but ultimately you want people who have been there and done things.
Andrew Byrne: London’s getting bigger and bigger... the population keeps growing, so I would put the first spade in the ground on Crossrail Two tomorrow.
Steve Folwell: I’d open up proper procurement. I’d re-tender everything on a timetable and give start-ups a fair crack of the whip.
Our group of experts identified a number of challenges facing London’s New and Growing Companies but were overwhelmingly positive about the prospects for the city’s business scene and Mayor Sadiq Khan’s efforts. What are your thoughts? Is London still the greatest city to launch and grow your business? Do you think the Mayor is doing a good job helping London’s businesses prosper?
Share your thoughts by emailing firstname.lastname@example.org, it’s good to talk!
If you would like to be part of future roundtable discussions, drop us an email and don’t forget to check out our Events calendar for details of future Workspace forums and networking opportunities