Where in the world is the UK's silicon valley?

But insiders complain loudly that its hard-won pioneer status is under threat, especially since the sale of commercial unit BBC Technology Ltd to Siemens in 2004.

Online projects are now heavily outsourced, with involvement from the likes of Google and Verisign, which funnels licence fees and talent straight to Silicon Valley. Some who have worked in BBC technology portray the botched development of on demand TV, with the Corporation falling behind commercial rivals, as the first poisoned fruit of this culture change.

BT – another grand old dame of British tech - is doing ok, with an expanding global reach and innovative reputation. Just don't call it British Telecom, OK? Those rich overseas folks will know where it came from. It's started buying companies overseas, as well as reselling the ideas it develops on home turf to doddering incumbent telcos who would once have been peers. The rollout of BT Vision, its IPTV service, has mostly been a technical triumph, for example. While it might be easy to find things wrong with a company of BT's size and influence, it's more instructive for context to compare it to Virgin Media, its floundering fibre optic rival, which looks weak financially and in terms of innovation.

Blowing bubbles

There was a time when Google was a just another garage startup in a part of the world which is awash with them, and awash with gamble-happy investors willing to take a punt. Venture capital in Blighty has always been a tougher monkey to catch. For a brief moment during the dotcom frenzy, when cash poured into technology from other parts of the UK economy, it was easy.

According to MoneyTree, in 2006, the US venture capital sector doled out more than $26bn to young companies. The British Venture Capital Association, meanwhile, reckons a total of £382m was invested in startup and early stage firms – about $780m at today’s exchange rates. As a proportion of GDP, that means venture capital investments account for about 0.2 per cent of the US economy and only 0.03 per cent of the UK’s.

Latterly however, even more whines have been raised that the (hitherto) burgeoning private equity market is funnelling focus and cash away from innovation.

Technically, venture capital is just a flavour of private equity aimed at young companies with no assets to offer investors but ideas and shares. In recent practice, with enormous buyouts of household names like Boots the chemist, private equity has become synonymous with City smash and grab raids.

Even 3i, the UK’s biggest name in technology venture capital has shifted away from speculative investments in new ideas. It still makes the small deals, but these days the one-time standard bearer for the UK's internet scene is throwing its billions at NCP, the multi-storey carpark group. It's been making a tactical withdrawl from the mobile and wireless industries too.

Julie Meyer, a venture capitalist at Aridane Capital, who back in the boom time was part of the team responsible for the famous/infamous First Tuesday networking events (where chancer startups would meet investors in west end bars armed with a domain name, and stagger away with a fat cheque) is still working on UK tech. The Last.fm deal should be taken with a pinch of salt, she reckons. Advertising-hopeful Web 2.0 just ain't where it's at, see?

It might not have a snappy label, but Meyer reckons the UK market for internet innovation is buoyant – as she well might – and that it is more sustainable than the cobbled-together Web 2.0 wheezes which are fermenting bubble talk in the Valley.

"These are bigger plays because they touch the telco infrastructure, and they're not as frothy – they're not getting acquired every other day. They're going to be with us a lot longer," she says.

For Meyer, the reasons why are clear. "People are online more than they're watching television - it's not a bubble. The point is that managing money, communications, whatever, online is continuing to take over our lives, and that's not going to change. People were occasionally buying stuff online [during the dotcom bubble]. Now they live their lives there."

SpinVox, one of Ariadne Capital's brightest hopes, is typical of the new breed. It's one of a gaggle of services which convert voicemail to SMS or email for the CrackBerry crowd. Which seems perfectly sensible and works OK most of the time.

Another site proving its usefulness is Nestoria.co.uk, a mashtastic property search engine which does a nice job of collating the various poorly-designed estate agent portals into a unified clean interface which maps your search results nicely.

That's not to say there aren't UK firms cooking up pointless content-free services for an audience which is destined to remain very limited, no matter how much money VCs give them.