The Uber case in London had a ruling that worried many who wished to invest in the on-demand economy, and rightly so. By recognizing Uber as a conventional employer when the very system of operations is supposed to work differently, investors and entrepreneurs are shying away from adopting the same system. Flexibility is a key element in the on-demand world. Without it, not much sets it apart from the conventional means and modes of doing business.
This is not to purport drivers getting revenue below minimum wage, but simply a lamentation at the inability of the court to come up with a solution that fits the mechanisms of the new economy – of course, rules and other legislation is bound to suffer change as we enter a new era.
However, all hope is not lost. London has, and will continue to have immense potential for the on-demand enterprise. Here, we discuss certain aspects that make London extremely favourable for your next on-demand business. If you were actively seeking to engineer the next disruption there, then we urge you not to desist now.
Well, let’s take a look at things which have NOT changed, despite the ruling that still looms like a bad dream.
The Fintech Realm
Since the advent of the on-demand economy, London has been quite a consistent candidate all set to become the fintech capital of the world – financial technology in turn boosts ventures for the on-demand economy, since it employs many of its mechanisms and new-age technological innovations to flourish.
A few figures from a Price, Water and Cooper’s report on London’s Fintech Industry should tell the story. This data was gathered when applications for PWC’s ‘startupbootcamp’ were filtered, since driving growth for the new economy is seen in the start-up world. In tandem, trends were noted and recorded, which represent the population that intends to infuse their time, energy and funding into the on-demand world.
Applications for the type of fintech service provided were largely in the Cashless World (19%), the Empowered Investor (17%), Cloud Solutions (14%) and Smarter machines (12%) sectors – with funding being given to the Alternative Lending and Crowdfunding concerns the most.
The Cashless World category consists of companies seeking to retrofit existing payment systems to new, alternative modes of payment – in the digital direction, of course. The adoption of smartphones has been cited to be a major cause for enthusiasm here.
Empowered Investors are those who do not make conventional investment decisions depending on company reputation and track record – they value the idea, its viability and its profitability with respect to the amount of technology that one can boost it with. So, new players on the block are being favoured more than those rusting and stagnating within their sectors. Since employee data is now becoming more transparent by the day with observable indicators for growth and potential, hiring personnel is more informal and happens digitally, more often than not. This serves the on-demand world very well, with its culture of freelancers and start-ups.
The interest in cloud solutions and smarter machines all points to one thing – the embrace of technology. With more and more businesses taking the smart route with analytics, big data, cloud computing for secure and seamless data storage and machine learning to save up on employee AND computing costs – the infusion is immense.
With such technological infrastructure, the environment is right, more so than ever, to plunge into the economy that relies on technology for its growth – the on-demand economy.
If that were not all, here’s a few more things to chew on.
- London has been ranked number one city in Europe for supporting both start-ups and scale-ups in the European Digital City Index. This takes into consideration the city’s substantial financial sector which is extremely friendly toward new businesses. The increasing number of crowdfunded enterprises, along with a large amount of seed bank-based investors streamline the entry of new and coming businesses for a profitable tomorrow.
- London also boasts of a pool of 44,000 employees working in London’s fintech sector and has 155,600 digital tech professionals in its employ – this makes the employee pool larger than New York City, or the famous Silicon Valley. The availability of personnel who can manoeuvre around the on-demand economy should help your next venture too.
- In terms of investments in the Fintech realm, London gets more than the other European counterparts combined – more than half that is – and new tech fund setups (Google Ventures, Santander) boost this statistic. In 2015, investments were quoted to be £343 million.
- Forbes asserts that UK fintech firms secured $5.4 billion of the $49.7 billion of global investment in financial tech between 2010 and 2015 – the rest of Europe managed a figure of $4.4 billion.
- While the law hasn’t been so kind to Uber, the same cannot be said for other fintech-based companies and ventures. In fact, with the regulatory sandbox created by the FCA (Financial Conduct Authority), businesses can test their innovations in a contained economic environment to check for viability. This gives a buffer against ideas that may not float, and also gives them incentive to be bold with their market disruption ideas.
- If we consider the alternative cities of New York and San Francisco which are seeing similar bursts in the on-demand sector, then London seems to be a better option since the financing AND technological innovation can be found in one place instead of being divorced in two.
- The Business, Innovation and Skills Company, under the direction of the house of Commons has released a favorable report for the digital sector for 2016-17. It states that the estimated turnover of digital tech industries in 2014 was £161 billion, and there are 56 million jobs in the digital tech economy, of which 41% are in traditionally non-digital industries. Furthermore, the average advertised salary in digital jobs is just under £50,000, 36% higher than the national average. So people aren’t exactly shying away from the new economy, they have embraced it as it becomes a solid driver for growth both in the economic and social realms.
- TechCity also states that there are 54,000 big data workers within 25 miles of London, compared to 57,000 for New York City and 98,000 for San Francisco/Silicon Valley – favourable for any company with such needs.
- A report from City Initiatives for Technology, Innovation and Entrepreneurship (CITIE) from Nesta, Accenture and Future Cities Catapult declared London to be second worldwide for supporting innovation and entrepreneurship, and it now has over 36 business accelerators, along with over 70 co-working spaces.
The Pain and the Gain
Our message at NextJuggernaut is simple – knowledge is necessary for the right decision to be made at the right time. For every Uber and Deliveroo strike out there, we can point to another good reason to not be daunted by London’s climate – volatile, or otherwise.
The on-demand world obviously comes with its own challenges. The shift was never meant to be butter-smooth. We directed you towards stats that clearly indicate London’s, and the UK’s potential as the hub for substantial on-demand activity. How? Well, many of the funding areas and many sectors which are seeing growth boosts are all very beneficial for the on-demand world – from crowdfunding to machine-learning, to the freelancer oriented workspace.
Regulations arise due to a need – a need to create a precedent. In this vein, sometimes half-handed decisions are made, altogether too hastily. That must not blindside us and prevent us from looking at the larger picture.
So what is the larger picture? Well, London’s tenacity for ushering in the new economy does not seem to be stopping anytime soon. With the growth and development in the sectors detailed above, it is only a matter of time before they renegotiate the rules for traditional businesses and meet the on-demand world halfway. The risk of being rigid in the face of these odds is greater than the risk of making that compromise.
To conclude – we reiterate that London and the UK are not landmine filled zones when you consider plunging into the on-demand world. It is simply a volatile time which can be blinding if proper insight is lacking. Thus, we urge businesses to remain patiend and persistent. For those looking to invest, do not hesitate before taking the plunge. Remember the big picture.