Support for the creative economy

Written evidence submitted by the City of London Corporation [SCE 082]

This letter responds to the recent invitation to submit written evidence to the above inquiry. The City Corporation is not in a position to reply in full to the questions posed by the Committee in its call for evidence but hopes that its experience in nurturing a cluster of creative firms on the ‘City Fringe’ might be of interest to the Committee’s inquiry.

It is important to recognise that many creative industries, and certainly those in and around the City Fringe, are small and medium sized enterprises (SMEs) and their presence contributes to maintaining and enhancing the City’s position as a leading international financial and business centre and contribute to the area’s economic prosperity.

However, London still faces significant challenges in maintaining the productivity and sustainability of SMEs. City fringe boroughs have high SME start-up rates, but they also suffer from some of the highest failure rates. Finance plays a key role in the creation of SMEs, alongside other support. The Corporation therefore believes that the encouragement of bank lending for SMEs remains important.

In order to support a thriving SME community, the Corporation has a substantial business support programme to facilitate the development and growth of small businesses in the City fringe through the provision of premises, finance and guidance. In October last year the City Corporation launched ‘Angels in the City’, a new initiative delivered in partnership with London Business Angels, to increase the awareness of ‘high net worth individuals’ in becoming ‘angel investors’. Investors bring their financial capacity and business experience to provide funding for innovative high-growth potential entrepreneurs in the City fringes, focusing especially on the ‘Tech City’ area.

The aim of the scheme is to recruit and build a new pool of 125 investors, which, in the longer term, could generate up to £10 million of investment per annum. Through Angels in the City, it is anticipated that at least 45 Tech City businesses will benefit from new investment, which is expected to result in the creation of around 200 jobs a year. Regular ‘pitching’ events are held to give small businesses and aspiring entrepreneurs the opportunity of presenting their ideas to businesses executives.

The City Corporation sponsors a new non-for-profit organisation, called ‘Entrepreneur First’. Entrepreneur First aims to encourage the younger generations to become entrepreneurs by offering training, tools and potential funding opportunities needed to launch a successful, high-growth start-up. The scheme has also been backed by Microsoft, Silicon Valley Bank and McKinsey & Company. This initiative complements the City Corporation’s facilitation of the ‘Innovation Warehouse’, an ‘incubator’ scheme in Smithfield providing business advice, networking opportunities and membership of an entrepreneurial community.

Support for aspiring entrepreneurs in identifying partners is provided through the ‘Founders Fit’ initiative which has been set up to help launch and grow start-ups. An event sponsored by the City Corporation in June attended by approximately 25 female entrepreneurs based in the City and City fringes. The event received very encouraging feedback and many women made links with professionals who are willing to join forces with the entrepreneurs as co-founders.

Finally, the City Corporation, through its own historic ties with the North West of Northern Ireland, the City has also fostered a memorandum of understanding between the Tech City Investment Organisation and an emerging social media and entrepreneurial cluster in Derry/Londonderry known as ‘Digital Derry’. This initiative seeks to encourage both emerging Tech City leaders and businesses as well as potential City-based investors look for similar clusters or hubs which may be of mutual benefit in terms of delivering growth within the UK’s creative economy.

I am sorry that the City was not able to make a full submission to the Committee but I hope this outline is of use.

November 2012

Prepared 28th November 2012