Tech City, entrepreneurial density, and startup ecosystem health

People often ask me about the importance of Tech City to London’s startup ecosystem. I think it has made a big difference and I usually reply saying something like “It’s great, now that a critical mass of people are in the same place we bump into each other in the streets and it’s much easier for people to come to networking events. Moreover the perceived success of Tech City is good for confidence, which is the underlying driver of so much in the startup world.” If I’m feeling flippant then I might add “And we moved here”.

Now the Kauffman foundation has just published a report which lists indicators of startup ecosystem health (summary here), and it turns out that “density” is top of the list:

Density: density of new and young firms, defined as the number of new and young companies per 1,000 people in a geographic area; share of employment in new and young firms; and high tech (or the region’s preferred sector) density.

The other three indicators are Fluidity, Connectivity, and Diversity.

The report goes on to suggest measures for all the indicators. It would be great to see someone research this properly and publish an index, mostly because it would tell us what we need to work on. The research will need to be thorough though, for example distinguishing between small companies and young companies that can scale.

  • Peter Jones

    Really interesting article.

    With a research suggestion like this, how might EK engage with those on the fringes of the startup community who want to help?

    How might that work for the involved parties?

  • Tks for the comment, but what’s EK?

  • Rinat Korbet

    I’m guessing he meant The Equity Kicker 🙂


  • Ah – thank you.

    I would happily advise a research effort and help publicise results.

  • Peter Jones

    I didn’t get any notifications for your reply, sorry about that. I’m @innov8tor3 on Twitter, and have studied stage 1 for tech startups in some depth for several years now. I’m planning and bootstrapping an App that supports Market research for startups as to how well their idea resounds in their prospective marketplaces. There is a stage 2 as well if I can get this off the ground…

    I’m also really keen to find better ways to bring experience to young startups, and to do so in an ethical and affordable way. We know startups are cash strapped, and need a way of spreading the risk. This can work through low cost prototyping, and giving advisers a chance to share risk whilst providing guidance.

    I particularly want to move away from the financial based view that every startup is a pure gamble, with a 10% or less hit rate, and instead emphasise the skills and disciplines needed to build a business.

    Would the above be included in your portfolio of advice you were prepared to give? And, crucially, on what terms?