Silicon Roundabout start-ups fall by a third

The location of choice for new high-tech firms, Silicon Roundabout, has seen the number of start-ups falling by more than a third last year, but it remains a popular location for high tech, freelancer companies.

The rate has gone from 15,620 to 10,280 as companies are priced out of the area by rising rents, according to research by accountants UHY Hacker Young. They explain that new business creation dropped for the second year in a row for the Silicon Roundabout area, just east of the City of London. It is one of the main locations for digital and technology companies in the UK, but rising rents and a lack of available office space are forcing firms to set up in cheaper neighbourhoods nearby.

Despite the fall, the area is still the UK's number one location for new business generation. It saw more than double the number of companies launched as in Canary Wharf, one of London's key business hubs.

Colin Jones, Partner at UHY Hacker Young, said: "Rising rents in the Silicon Roundabout area are causing many start-ups to choose other neighbouring areas of central London, such as City Road, as their first base."

The City Road area, to the north of Silicon Roundabout and covered by the N1 postcode, saw the fastest increase in the number of new businesses out of the UK's top five locations for start-ups. It saw a 479 per cent increase in the number of new companies, from 1,450 to 8,400 in the last year.

'One-man bands'

The area is particularly attractive to the freelancer, high tech community.

Mr Jones said: "However, Silicon Roundabout is still at the forefront of national business creation, and it is still the epicentre of the UK's technology industry, attracting both start-ups and larger firms to the area, such as Cisco and Amazon.

"Most of the new businesses will be smaller one-man bands such as individual programmers or media consultants, who are attracted to the area by the opportunities to collaborate with their neighbours.

"Silicon Roundabout has almost become a victim of its own success. By attracting larger firms into the area, rents increase, available space decreases, and the smaller start-ups that were initially attracted to the area are forced out into neighbouring areas.

"That is exactly why we have seen the tech start-ups heading away from Old Street to the City Road area.

"Many high profile digital and online companies have chosen to base themselves in N1 with Lyst, the online luxury fashion retailer, and Decoded, the programming instruction firm for professionals, being just two examples."