London is often referred to the leading startup hub in the United Kingdom. In 2018, around 216 000 new businesses were established in London and this number keeps growing. Location is an essential factor to consider when starting your own business and may be one of many reasons for succeeding. But which factors should startups consider when choosing a location and is there any regional differences between startup innovation in the different cities across the UK?
1. Different cities welcome different sectors. When founding your startup it is essential to know which cities align with your startup as it may simplify or hinder fundraising. London is often called Europe’s financial hub and has had a great history when it comes to offering financial services. This attracts many new FinTech’s as there are more opportunities for growth and partnership opportunities.
2. Access to capital and growth. There is no surprise that since London has the greatest number of startups there are more funding opportunities. In 2017 there was €2.5 billion raised by startups in London which suggests it is very viable to create businesses in London. Therefore, startups that require heavy funding for MVP and tech companies are usually located in London due to better access to funding. Moreover, London also has the greatest number of incubators and accelerators in the UK which increases the possibility to grow.
3. How costly is the city? When you have launched your business and you’re starting to get your first revenue it is important to keep expenses low. If your startups do not require any funding for MVP or rely on proximity to customers, then considering locating your startup in London may not be suitable. According to Forbes, if you are planning to start your own digital business the best three cities in the UK are Sheffield, Nottingham and Leicester due to its cost advantage, infrastructure and access to distribution facilities.
4. Where is the demand of the product you are launching? In 2017, Oxford was known to be the best place to start your own startup for local services. The main reason was due to the massive excess demand for local services which made it the most attractive place for new ventures. The research was conducted by using google searches enquires to look for which towns had the largest shortfalls. Therefore, when launching your startup it is important to consider if there is enough demand to sustain your business in the long run.
5. Proximity to the factor of production. Some startups may require specific material which may affect the location of the startup. For instance, in Sheffield manufacture startups are very likely to succeed due to the enormous rich industrial heritage of the city. Being close to your suppliers will give you cost advantages and therefore is worth considering. However, if you are a tech-focused startup London may be a better option due to the existing pool of labour with over 300 000 developers.
Was there anything we missed? Or maybe you’d like to share your own experiences? Feel free to comment on or share this post!
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