Which City Rivals Silicon Valley in the Race to Become the Most Innovative?

1st Oct 2021
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Silicon Valley. It’s the home of tech giants such as Apple, Google and Facebook and is known as the most innovative city in the world.

Why?

Innovation is Silicon Valley’s lifeblood: It lives and breathes innovative ideas and new ways of doing things. And the famously fierce competition that this city breeds, spurs on the constant churning of new ideas, thoughts, products, services and processes. 

But there’s another city that’s riding hot on the tails of Silicon Valley in terms of its innovative outlook, drive and culture. Which city is it and how is it managing to take on the godfather of innovation, Silicon Valley?

Why is it important to be a leading innovative city?

Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services.” – Wikipedia

Innovation can make or break a city. Creating a city culture where exciting new thoughts, ideas, and collaborations are happening all the time means that companies within those cities can deliver products and services faster, better and cheaper. More jobs and opportunities are created, and the government is able to tackle and address the long-term challenges that come from social, economic, demographic, environmental and technological changes.

Innovation enhances the resilience of a city and keeps it growing and developing. For example, in the 20th Century, Tokyo started to import push bikes (a brand new, game-changing revelation at the time). This pioneering idea created a natural market for repair shops. And, to supply the repair shops with the parts they needed, manufacturing factories were developed. This meant more jobs for people in Tokyo, which created a new economy and helped the city expand. 

So that’s why innovation helps cities like Silicon Valley to become successful on a global scale, but which city is rivalling Silicon Valley for innovation? 

Which city rivals Silicon Valley for innovation? 

The city that’s jostling Silicon Valley for first place in the race to become the most innovative city in the world is….

Our very own London city.

Despite the setbacks we’ve experienced (and are still experiencing) in the wake of Brexit, the economy crash and COVID-19, London has been announced as the leading city for innovation, outside of Silicon Valley.

This isn’t a fluke either: This is the second year in a row that our capital city has earned this coveted spot at the top of the innovation table. We’re the only European city to make the top 10 and are streets ahead of notoriously innovative cities like Beijing and Boston who came 4th and 5th respectively.

And it’s been a steady slog to the top: Over the past eight years, we’ve been steadily climbing up the ranks. In 2012 we were in 8th place and 2020 saw us make it to 2nd place.

How have we done it? 

Why is London so innovative?

In the face of Brexit and the global pandemic, London has demonstrated its resilience and proven itself once again to be one of the best places globally for tech innovations and start-ups.” The Mayor of London, Sadiq Khan

To get to the top spot, London ranked highly in areas such as the number of accelerators, incubators, research grants and R&D anchors in the city.

The advantages London has over other European cities include access to deeper pools of capital and talent and larger networks of investors. Let’s take a closer look at these, and some of the other factors that have made London the second most innovative city in the world:

Investment and funding

London is one of the best cities in the world for access to funding and quality and activity in the investment ecosystem (referring to the number of local investors, investor experience and their level of activity).” – UK Tech News

In 2020, in Q4 alone, investment volumes rose to almost £5 billion, and London has already seen record levels of investment in tech this year. This is because London is home to over 1,370 venture capitalist firms – more than any other European city – which provides access to a vast network of investors.

For instance, the biomedical sector has been granted £1.5 billion for research from 2021 onwards and London’s fintech sector managed to raise over £3 billion in just six months.

London attracts and is home to so many investors and so much investment capital because of its world-leading ecosystem and remarkable entrepreneurs. With world-class tech talent and sector expertise, London has an abundance of innovative entrepreneurs, start-ups and scale-ups which generate long term value accretion.” Eileen Burbidge, Partner at London VC firm, Passion Capital

The record levels of investment is proof that London is not only Europe’s largest innovative tech hub, it’s also now a major player on the global stage.

Alongside investment from private investors and VC’s, the government-run R&D tax incentive which gives innovative companies up to 33% off the costs associated with the research and development of new products, processes and services provides extra security and is allowing companies to take bigger risks with their innovative projects.

Universities and research institutions

Universities are a breeding ground for the research and development of new ideas, and London is home to two universities that are globally recognised for their ability to generate patents, create spin-offs and undertake industry research.

Plus, almost 2,000 research institutions are based in London, which is the highest level in the world. This further cements London’s position as the 2nd best city for innovation.

Skilled workers

Innovative ideas, products, processes and services need talented and skilled people. London is recognised for its world-class pool of talent, especially within the tech and life sciences sectors. For instance, over 484 thousand software developers currently reside in London.

Start-ups and SMEs

Start-ups and SMEs are renowned for producing innovative, forward-thinking ideas. And London’s start-up eco-system is worth £105 billion, the largest in Europe.

“London’s fundamental strengths in talent, global connectedness and access to funding are the reasons it continues to feature highly in our rankings and remains the number one start-up hub in Europe.” – UK Tech News

With investment in start-ups averaging £9 billion in the first seven months of the year, London’s start-ups have access to deeper pools of capital, with an average seed round of £480k, which is above the global average of $494k.

For start-ups and high growth companies looking at alternatives to Silicon Valley, London has access to high levels of funding, talent and customers all in one city.” – UK Tech News

Conclusion

When you look at the above factors, it becomes easy to see why London takes the top spot in the innovation cities league table.

In innovation-led cities, businesses need skilled people, investment opportunities, start-up support and reputable universities and research centres that can work closely with industries to innovate: London is well-positioned to offer companies all of this, and more.

This article was brought to you by Myriad Associates

Myriad Associates is a specialist R&D tax credit consultancy, with over a decade of experience in submitting successful R&D claims on behalf of their clients. With a 100% success record and a strong relationship with HMRC, Myriad can work with you to secure the maximum amount of R&D tax relief for your clients.

To find out more, call them on 0207 118 6045 or drop them a message.