London’s shared office space is a hub of activity and it’s rapidly becoming more popular. Demand is on the rise; but why is London such a great place for startups and why do they love shared office space?
Firstly, let’s take a look at what’s going on with startups in the capital.
The home of at least 400,000 micro-businesses and startups (NOMIS 2014), London is first on the list for many new companies eager to make their mark. London ranks as the largest startup ecosystem in Europe, coming in 6th according to the Compass’ 2015 edition of the Startup Genome Project.
There’s a reason why the area stretching from Liverpool St to Old Street has been dubbed “Tech City”. According to data from NOMIS, the highest proportion of startups and small businesses is in the Square Mile. In fact, they account for a whopping 14.88% of the total enterprises in the area; 8.30% being the London average. Not only that, 80% of enterprises in the area are micro-companies of 9 or less employees, making a density of startups unparalleled throughout the rest of the city.
As the financial hub of London and the world, The City is a clear choice for “fintech” startups (specialising in financial technology) and tech startups. In March this year, marketplace for tech talent, Hired, opened its first overseas office in London due to the rising demand for tech talent to the tune of over £10 million in job offers in just 16 months.
But it’s not just this area of London that startups are choosing to settle. All kinds of startups are finding homes in North, West, Central and South London. One outcome of this boom is the gradually increasing price of office space all over London, prompting businesses and offices to look at cost saving alternatives.
How is this affecting the big guys?
Larger companies begin to see the benefits of renting their spare buildings, offices and desks out to some of London’s entrepreneurs, startups and micro-businesses. In doing so they are opening up a valuable source of previously untapped revenue and the resulting influx of talent serves as a resource for larger companies that benefit from the new energy and ideas that startups bring on site.
Offering office space to startups isn’t the only way that large businesses are getting more involved than ever before. This is creating mutually beneficial partnerships and a co-operative atmosphere between startups and established corporations.
Mentorship and acceleration initiatives aimed at harnessing the ideas being created in the startup space are being launched with enthusiasm. Look at the insurance industry which has been left lagging behind in the tech curve. In its efforts to catch up, companies like Admiral and Allianz are partnering with tech accelerator Startupbootcamp to offer free three-month tech programmes to help startups and find the insurance tech of the future.
But why is shared office space so good for startups?
Renting shared office space is a great way for entrepreneurs and startups to get access to mentors and other resources that would otherwise be cut off. It’s not always just about renting a desk. Look at spaces like Impact Hub in Westminster as one example. They have initiatives like the Raise Impact Crowd Funding Accelerator and the Impact Scholarship. The Collective Elevator also offer seed funding, incubator programmes and mentorship for startups.
Working in shared space means that as a startup you have access to a range of people on the same wavelength. In that kind of atmosphere it’s unavoidable that you’ll network without even realising, making mutually beneficial relationships, contacts and friendships in the process. This kind of early interaction is invaluable for young businesses. It’s not just the people working in the immediate vicinity; you’ll get introduced to their networks too, which can result in business leads.
Cost and flexibility
One of the biggest concerns of startups is keeping burn rate down. Not having to pay utility bills is a big bonus of shared office space. Also, paying for desks that aren’t needed isn’t a problem. Not having to sign a commercial lease is a huge benefit for small companies that don’t know where they will be in a few months time. Hubble grew from 2 employees to 10 in a matter of just a few weeks – it’s hard to predict what size office you’re going to need from month to month, especially if you scale your business quickly.
This can be especially helpful for entrepreneurs running their first startup. As you’re growing your company you’ll have a lot to learn. These are things that all companies go through and can include everything from easier ways to make spreadsheets to getting your head around analytics. It’s guaranteed that there will be someone in the shared space that can help you out with a few simple tips, and you’ll probably find this out as you have a chat over making a cup of tea.
All kinds of events and networking evenings (admittedly, some are more valuable than others) to help startups are being held around the city. If you attend good events regularly you’ll get to meet startups from all over the world, not just London. These events are often organised by companies that host shared office space and are sometimes held in those spaces. It makes it easy to attend if you just need to leave your desk, go downstairs, grab a beer and take a seat.
When you’re setting out on your own it can be pretty daunting. It helps to have people around that are in the same boat, so that when you’re stuck or feeling low, you know your fellow sharers will probably have been in exactly the same place as you at one point or another. It’s also morale-boosting and inspiring to get into an office every day where other people are working hard towards their goals.
Rent a desk for a month and see if you like it. Because you’re not signing a lease, you can leave if you feel it’s not for you. It could be the best decision you make for your startup.