Interview: Joanna Shields, CEO, Tech City

Working with startups

“If I was a CIO right now, I’d be looking at small businesses in Britain,” says Shields.

Acquiring British startups provides a great opportunity to bring innovation into large organisations, she says. In the US, big companies use startups to their competitive advantage, but the UK has yet to catch up with the potential.

“I don’t think we’re as acquisitive as we need to be in the UK,” she says. “In the US, companies use startups to diversify their product offering, develop new technologies, and bring in huge teams of talent that they don’t have inside.”

CIOs also need to look at the potential of British startups as partners and suppliers as “alternative methods to re-ignite an organisation and to reduce costs.

“Small businesses are able to bid on a project and deliver it at a fraction of the cost of some of these established players,” she says. “Especially now, with open systems and cloud computing, things are much easier for a smaller company to bid on it and be successful – and they’re more innovative.”

As well as CEO of the Tech City Investment Organisation (TCIO), she was also appointed the business ambassador for the digital industries by the government last October.

At the time, prime minister David Cameron said how important it was to support Tech City, and that Shields’s experience would be hugely valuable in “promoting the UK around the world”.

The Tech City area – also known as London’s Silicon roundabout – is based in and around Old Street and Shoreditch in the East of London. In the late 2000s the area became home to a number of technology companies, and in 2008, the government announced plans to accelerate the growth of the cluster.

Tech City was established to support the development of the East London cluster, aiming to make it the centre of innovation in Europe.

The initiative has since attracted large tech giants, including Google, Microsoft, Vodafone and Amazon, as well as becoming a hotbed for startups through a number of accelerator programmes which have sprung up over the past couple of years.

Tech is becoming quite cool in the UK

Joanna Shields, Tech City

Location, location location

But London is not the only hotbed of technology innovation in the UK. Shields says startups are growing in clusters around urban areas – which she calls the “urban ideas factory”.

They are also becoming easier to find and more vocal about their products and solutions. “Tech is becoming quite cool in the UK,” she says, which is partly due to the media attention Tech City has received during her tenure.

For a successful relationship between big companies and startups, geography is also an important factor. Shields says that because teams should work closely together, they should be in the same area.

She points to university areas, which produce different technologies representing the region. “You see unique types of businesses growing up around the universities across the country,” she says. “Manchester is a great example, with its burgeoning startup culture around creativity and digital media.”

She also notes the Bristol/Bath corridor for its life sciences and silicon chips industry, and Cambridge, famous for its semi-conductors and the B2B success story, Autonomy.

Second stage funding blockade

She talks energetically about the quality of businesses in the UK, but appreciates that startups are having difficulty acquiring funding. In particular, second stage funding for companies with the potential to grow further is difficult to get hold of.

There is a lot of funding in the angel stage, she says, which helps to “spark ideas and get them off the ground”, but "the mid-stage is a challenging area”. 

Initiatives such as startup loans and the government’s Seed Enterprise Investment Scheme has helped East London home thousands of small businesses.

But the lack of second stage of funding is choking these companies and preventing them from growing any further. Alistair Mitchell, CEO of Huddle, told Computer Weekly that the issue needs “direct stimulation from the government”.

Mitchell warned that if US investors come over and offer attractive startups money that they can’t easily get in the UK, they may be persuaded to go to the US.

Shields is actively encouraging foreign investment from venture capital (VC) firms in Silicon Valley which are attracted to the UK “as a potential source of new business investment”.

Part of the way Tech City's success is measured is through attracting foreign direct investment. The initiative works with the UK Trade & Investment (UKTI) across the globe to grow potential investment and to attract new companies to the cluster.

But Tech City is not an incubator for startups in the UK to be readily handpicked by the US. Shields says the initiative has also been working with the London Stock Exchange to encourage companies to go to the public market. This high-growth segment is specifically aimed at technology businesses, and the Future Fifty programme was launched recently to fast-track 50 businesses onto the stock market through mentorship, tailored information and investment advice.

“Whatever they need for support within government, we’re going to help them cross that line so we have more companies going public in the UK rather than crossing the pond to address the public markets in the US,” she says.