5 Reasons Why London Is A Great City for Startups
Why London Remains Strong Even With Brexit
Recently, London was ranked on the 3rd place after New York and San Francisco on The Tech Cities Global Ranking by World Economic Forum. As a Londoner who relocated from San Francisco and previously stayed in NYC for a few months, I am excited to see that the list is well-reflecting the reality.
I would like to deep-dive a little more and introduce why London is a great city for startups for the people who are looking to find the next place to build their businesses.
What makes London so great?
1. Smart Visa Options for Tech Founders
This is the most important topic for many international founders as visa becomes problematic when they don’t have citizenship in the country where they build the business in. There are so many sad cases where founders, including myself, who started businesses in the US but had to leave due to the complex visa process. There have been years of discussions around it at the executive level in the US but it hasn’t been clearly resolved yet.
On the other hand, UK is offering strong visa options for the founders via Tech Nation visa options which I believe to be the best visa ever in the world offered to tech talent, as I have introduced in “The Comprehensive Guide to the UK Tech Nation Visa”. UK government already doubled the annual quota of the Tech Nation visa from 200 to 400 since 2018 and is currently adding more categories to make it even more streamlined and faster for founders who want to come to build businesses in the UK or companies to want to hire tech talent from non-EU countries.
Once you make a decision and you are qualified, you can prepare all the documents and start the process which takes up to 3 months. Then you can start living in the UK working on your own company or working with a great team on a big mission not too long after your decision!
2. Tremendous Government Support
This concept doesn’t quite exist in the US but the governments from many countries around the world including the UK government are putting lots of effort in the startup ecosystem and tech initiatives. Below are some of the examples of what the UK government is doing.
1) Online incorporation: The UK’s government websites and their online system are really impressive. It’s a nice surprise as our expectations of governments’ online systems are usually not very high. UK government has streamlined the online incorporation process — it costs 12 GBP and takes 24 hours to incorporate a company and you can easily do it yourself directly on the government website. It’s even simpler and faster than Delaware.
2) The UK government grants: the UK government grants is the public fund that goes to the successful applicants who are initiating early research, projects, or startup businesses in various fields. The funds are announced throughout the year for different fields. Most of them are open for a few months until deadlines and it takes several months to go through the evaluation. Also, the application format has to be in a certain way — something between academic and business. So this may work out better with the individuals or teams coming from an academic or research background that are trying to develop their projects into bigger research or businesses.
3) EIS/SEIS: This is a tax benefit for angel investors. The UK government is encouraging individuals to invest in startups by giving them huge tax benefits which pretty much covers their invested amount. Because of this, the UK angel investments which would’ve been more conservative otherwise are encouraged and getting involved.
4) R&D Refund: UK government subsidizes a company’s R&D costs up to 30% which is huge. There is a heavy application process that you need to go through but there are always services or other companies doing this for you.
5) Government bodies: There are several government bodies actively involved in the startup ecosystem and providing support.
- Tech Nation: Tech Nation is a government body that creates initiatives to support the UK tech industry including the smart visa process.
- Department of International Trade: DIT runs “Global Entrepreneur Programme” which is designed to support businesses in the UK by providing government resources and network.
- London & Partners: Partnering with Mayor of London, the program provides businesses and startups with accelerator-style seminars and network.
3. Access to the Talent
London is a global hub of education. 15 of the world top universities are in the country of 66 million population, attracting talent in various fields from the EU and around the world. The fluidity among the EU countries helped the UK attract and keep the talent easily and makes London a gigantic talent pool.
Also, the salary range is lower compared to the US. For founders who are trying to build businesses here, the UK is a great place to find great talent with much less competition and cost.
4. Geographic Advantage
London is beautifully located on the west end of Europe. Most major European cities are covered within the 2-hour flight and take about 3 hours to Eastern Europe where many engineers reside. Eurostar takes 2 hours to reach Paris or Brussels. To New York, it takes 8-hour flight, which isn’t so much more than the 6.5-hour flight from New York to San Francisco. The proximity to so many places makes it easy to work with markets in any direction you want to reach.
As a result, many companies and venture capitals consider London as a portal to Europe — they come to London as the first place after the success in the US or Asia. London is vibrant with the opportunities and capitals entering the city.
5. Cost of Living
London is a much more affordable city compared to San Francisco and New York, as I have thoroughly discussed in “Is Living in London Really Expensive?”. In a nutshell, London has 46.90% lower rent and 51.35% lower grocery prices than San Francisco. Compared to New York, London has 27.31% lower rent, 38.38% lower grocery prices and 10.47% lower restaurant prices.
Of course, you can start a business anywhere in the world, especially if it’s an online business. But for various reasons including what has been addressed above, many of us choose to live in the places where things are “happening”. But we also get to be cost-conscious especially during the early stage of our business. Therefore, London offers this great balance of what the city offers as a great tech city and the (relative) affordability.
Of course, there are reasons why the Bay Area and New York City produce the most successful tech companies — the strong American entrepreneurial spirit, available capital, large domestic market, paying-forward culture and so on. But after constantly hearing about the exodus attempts and the complaints about insane rent prices, I felt that it’s time to share an example of great cities outside the bubble and why it’s worth considering.
What do you think? If you have questions or more things that you want to know about London, please reach me!
