Tech deals are back at dotcom boom levels, but this time around there is no bubble. A large proportion of investments and acquisitions are in the internet of things and connected devices. According to EY, the tech sector will perform well in 2015, with a strong innovation pipeline. Investment into the sector last year was unparalleled, and most of the money ended up in London.
Technology is no longer just a sector or domain, but is underpinning how we live. It is transforming medicine, transport, cities, education, finance, work, energy – every area of our lives. So it seems hard to call it a sector at all anymore. There is a fundamental shift going on in how we work, live and shop, enabled by technology and the commercialisation of research.
For that tech to emerge, it has to be enabled by start-ups – founders willing to try to create something new. There is a great book called Where Good Ideas Come From: The Natural History of Innovation by Steven Johnson, which explores the conditions needed to create new ideas. At a micro scale, this can be on a building and workplace level, but at the macro scale the whole city becomes the accelerator.
This is happening across the UK. The fastest growing digital clusters are Brighton, Cardiff, Bournemouth, Manchester, Cambridge, Newcastle and Edinburgh, and the government is now committed to resourcing Tech North, an initiative to underpin the development of those ecosystems to promote, support and connect them in the way that London has had.
The capital, meanwhile, goes from strength to strength. The fintech cluster is gathering pace, with significant investments into companies such as Transferwise. The money transfer start-up is now part of the UK’s Future Fifty accelerator programme, which has just seen several of its first cohort graduate and has taken on a new group to create a pipeline of high-growth, high-value companies.
The UK also leads the world in smart cities and is in a great position to join in a massively scaling market. Somewhat staggeringly, 1.3m people per week move to a city (on a global scale), and we will collectively cover a country the size of Australia in additional city development by 2025. The value of this development is a global market of $1.3tn (£855bn).
It is in this domain that the tech industry will overlap with the property industry. We have already seen how tech companies have driven us in the design of new spaces and collaborative working.
Now we are seeing property companies working with tech and media on marketing.
The next wave will be scalable deployment of tech in buildings via iBeacon or WiFi tracking to locate people through their mobile devices.
All of this raises questions around personal data transactions and protections. The role of government will be to reassure citizens, provide protection and standards to the tech industry and to enable deployment.
This is like building the internet all over again, and it is really exciting. The interface between property, tech and cities is just warming up.
Juliette Morgan is a partner at Cushman & Wakefield and head of property at Tech City UK
