Ian Burrell: Google will add real momentumto East London's technology hub

Google will announce plans this week for a seven-storey "campus" near East London's Silicon Roundabout. Twitter arrived in the area last year when it bought the UK business TweetDeck, and FourSquare, the location-based social networking site, is moving into the neighbourhood.

The big boys have arrived. Unlike most of the snarled-up gyratory systems in the capital, there is a fresh momentum about Silicon Roundabout, a district around Old Street tube station which was first identified in 2008 as a group of 15 start-ups and has now grown to about 600 businesses. The government has re-branded the area as Tech City and is hoping that the Olympics will provide a further catalyst. A "Start-Up Games" is being planned at which 300 international tech companies will compete – by pitching to a panel of experts – for gold, silver and bronze medals that will be presented on a plinth overlooking the Olympic Park. "We are going to be showcasing the very best of the area," says Eric Van Der Kleij, Tech City's CEO, who points out that 20,000 journalists will be reporting from East London this summer.

According to Van Der Kleij, this digital hub is unrivalled in Europe and stands alongside Silicon Valley and New York as one of the three great technology centres of the world.

His enthusiasm is not universally shared, however. Olivia Solon, associate editor of wired.co.uk, which recently reported that 50 US-based executives from companies including Microsoft, Google and Apple had decamped to Silicon Roundabout, is disappointed that none of the London companies have grown to become giants of the Internet. "There is no denying there are lots of cool companies in that area but none of them are growing at any terrifying rate – we aren't seeing the next Facebook emerging at this point."

The biggest success story so far is Moshi Monsters, the virtual pets site, followed by the likes of the concerttracking site Songkick, business card printer moo.com and the established music site lastfm.

Jason Goodman, the founder of the digital creative agency Albion, was one of the first of the tech arrivals in the Old Street area, nearly a decade ago. Albion has recently taken an additional floor in the iconic Tea Building and is providing desk space for start-up companies. Goodman praises Van Der Kleij for having taken Tech City beyond the realms of "political hot air" and gaining the attention of the big players. "He has not only sold the concept very well, he has persuaded a lot of corporates to move their bases into the area. It makes a big difference when you have the likes of Google, Twitter, Intel – these guys fund a lot of the networking and provide a lot of resources. They create certainty to the environment and lay longer-term foundations."

But Goodman compares Silicon Roundabout unfavourably with Tel Aviv's Silicon Wadi, which has benefited from two decades of Israeli government investment, including in specialist education. "They are delivering phenomenal developers and amazing engineers, a lot of the skill sets needed to be a genuine leader in technology," he says. "If the London School of Economics and Imperial College moved building space into this area with a specific focus on mobile and the web that would indicate that this is really substantial."

Seedcamp, Europe's leading start-up accelerator, moved to Silicon Roundabout last summer. Reshma Sohoni, a partner and co-founder, has no doubt that the area is Europe's leading technology hub. She says the companies in the district are still taking "baby steps" and she expects many changes to take place in the next three or four years. "We are extremely excited by the pace of things that we are seeing."

Seedcamp is backing London start-ups such as Lookk.com, a fashion site that highlights the creations of undiscovered designers.

Last week another global technology giant, Cisco, launched its "Big Awards" scheme to support innovative British start-ups.

Google's Silicon Roundabout facility is likely to be based on research and development and also house workers from outside the company (which will retain its corporate buildings in London's Victoria and Covent Garden). "The arrival of the Google building will certainly boost the area's reputation and investment opportunities," says Harry Cymbler, the founder of the digital PR and social media agency Hot Cherry.

Although there are grumblings in Old Street that more public money should be spent on enabling the technology sector to kickstart the economy, it is "natural organic growth" that Eric Van Der Kleij is looking for. "Cheerleading from the sidelines is the best position for the government," he says. Silicon Roundabout could give London a greater lasting value than those five Olympic rings.

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