London is one of the most dynamic global destinations for entrepreneurs and start-ups. An international superpower, the UK capital remains among the world’s foremost commercial and financial centres, and many of the world’s largest companies are headquartered within its borders.
But for many start-ups, London can be a daunting place to start a business and find an office.
In this blog, we’ll assess some of the driving factors behind London’s emergence as a base for new businesses, and some of the reasons why London startups may be getting a head start.
The Death of Red Tape
Historically, starting a business in the capital has been seen as an administrative nightmare, an issue that has plagued many of Europe’s biggest cities. Recently though, things have improved for entrepreneurs who are trying to set up.
The regulatory and legal requirements for establishing a new business in London have been simplified and better articulated. A digital revolution can be largely credited in this regard, making it possible to do anything from filling out a tax return, to incorporating a company possible, online.
Britain’s tax authorities have, furthermore, come a long way in terms of acknowledging the challenges faced by London startups and introducing legislation that makes it easier for them to become profitable, as soon as possible.
The British government has introduced several financial schemes that are very clearly aimed at attracting and nurturing new business. Should your startup develop well and you reach the point where you decide to sell, you will be able to claim up to £10 million of Entrepreneurs Relief, and investors can claim up to £150,000 in tax credits on their investments each year.
It’s worth noting that schemes like this are being regularly updated and expanded, which is a great indicator of their efficacy. Entrepreneurs Relief, for example, has increased to £10 million, from just £1 million in 2008.
Open the Gates!
Another huge contributing factor is the transformation of legislation governing businesses from outside the UK that wish to set up in London. For many years, business opportunities in the UK could only be pursued by startups from within the European Union. In 2012, however, a new category of visa was created to allow individuals from anywhere in the world to enter the UK and establish a company, on condition that at least £50,000 was invested in the UK.
This radical change is very much in line with the current trend in many countries across Europe, aimed at encouraging immigrant startups and new business. And it is another reason why many of the world’s top startups have elected to be headquartered in Europe.
Immigration law is only the beginning though, and startup “incubators” and mentorship programmes are making the UK an even more attractive environment for startups. Arguably the best known and most successful of these thus far is Seedcamp. Seedcamp runs its programme throughout Europe and is even reaching out as far as Africa, and the East and West Coast of the US. Through programmes like Seedcamp, new businesses are assisted in securing startup loans and access to mentors who can offer insight and understanding of the local market.
All the Right Ingredients
These are just some of the changes that are transforming London into a more attractive prospect for startups from a financial perspective. But a stable economy and governmental stimulus can only go so far in terms of helping a startup to lay strong foundations and grow towards profitability. But there are even more reasons as to why London is such a great location to run an innovative business.
London has become one of the most globalised cities in the world, and this grants so much more to startups than just a thriving and accessible export market. New companies can pick and choose from an exceptionally diverse and highly skilled workforce, numbering in excess of 4 million. Within this group are advanced, multi-skilled tech experts, some of the finest creative talent on the planet and native speakers of over 230 different languages. Not to mention job seekers with hands-on experience in overseas markets.
For startups looking to work with large corporates, more of the world’s largest companies are headquartered in London than in any other European city. What’s more, its time zone overlaps favourably with major cities in Europe, Asia and the US. Indeed, it is estimated that London’s office hours overlap with countries that collectively generate 99% of the global GDP.
Of course London is an obvious choice for startups with dreams of cornering the European market, but the local market is a force unto itself. 8 million Londoners represent a huge opportunity for startups to cultivate interest in a new product or service, before even considering using the city’s world-class rail and air link to service a market of over 500 million people.
Slowly but surely, the world’s major business centres are introducing new systems and revising legislation to generate a more attractive and sustainable environment for startups, and particularly those from outside their own borders. London is leading the way and the future seems bright for the capital’s startups looking to take advantage of its diversity, location and global status.
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