Opinion The UK tech industry has never boasted a throbbing heart to match Silicon Valley. The industry, such as it is, is scattered across a multitude of business parks throughout the country.

But as the power of the voodoo around Web 2.0 reaches unprecedented heights, it seems appropriate to mount an expedition in search of the internet scene in the UK. Maybe the magic of JavaScript will fill the coffee shops of Leeds with MacBook-wielding web polymaths who’ll create a virtuous circle of startups, successes, and gloriously unpunished failures.

Or not.

Decades of attempts to address the lack of a physical place for bright young minds to congregate have fallen flat: technology triangles, innovation incubators, and a hundred other EU grant-funded initiatives have failed to create anything remotely comparable.

Of course, our search is an act of self-flagellation. For a start, we've never had a proper label for the disparate successes that punctuate the tech industry's history in the UK. There's nothing that even approaches the instant recognition and understanding that the words "Silicon Valley" generate.

Silicon Fen outside Cambridge pretty well scuppered its chances of becoming a genuine phenomenon as soon as it invited the comparisons with the region that birthed HP, Apple, Google and Intel. Steady successes like chip designer ARM have emerged from the Fen, and it claims to be the second largest venture capital market in the world behind Silicon Valley. But we're after Google-sized internet hype here: weightless share price, government influence, Teflon public image, that kind of thing. Alas, there's never been justification to mint a buzzword even as nebulous as Web 2.0.

No matter, perhaps we can ride its wispy coattails. Witness Ofcom's plans for a "Public Service Publisher" (http://www.theregister.co.uk/2007/06/13/psp_boondoggle_response/) to dish out millions of pounds in taxpayers' money to webby startups, and the endless soporific babble of Facebook anecdotes from mainstream outlets' banner columnists and Sunday supplements.

We could be on to something.

A couple of months back, a ripple of excitement ran through newsrooms when CBS bought net radio outfit Last.fm for a $280m pile of cash. Nevermind the fact that CBS is a giant American media conglomerate, this had to be the start of Swinging London 2.0! In the months running up to the sale, founder Martin Stiksel told us he was already being called upon to bat away breathless suggestions of a thriving London web scene to rival northern California.

Unfortunately for us anyone who goes down to Last.fm's very unassuming east end HQ doesn't find a MySpace in waiting, or a swarm of venture capitalists raining money down on passers by, just a bunch of music fans who know how to work the internet.

Last.fm’s location certainly holds no clues to the heart of our web scene either: it naturally found a home in the Nathan Barley borough of Shoreditch because it primarily considers itself a music company. Cheap (for central London) rents mean a few old sheds nearby are home to some key internet firms, but really we’re talking routers and data centres. The buzz you can feel is most likely from the uninterruptable power supplies.

Instead, Last.fm struggles to find enough competent PHP developers to build its site. Contrast that with Google in the US, which resorts to a Krypton Factor-esque filtering process to differentiate the hordes of eager graduates and Yahoo! refugees who queue at the gates of the Googlag.

British Botching Corporation

When comparing the UK tech climate with the seething capitalist intensity of activity on the US west coast, it's easy to forget the comfy old BBC, which employs more UK web development talent than anyone else (as well as everyone who got a 2:2 in classical civilisation at Oxbridge).

Ignoring the waste and delays (http://www.theregister.co.uk/2007/06/22/iplayer_osc_eu_ofcom/) over iPlayer, and the debacle (http://www.theregister.co.uk/2007/05/15/no_jam_tomorrow_at_beeb/) of its online education service Jam, the Beeb is hugely respected worldwide as an innovator in online technology and content.

If there was a coherent UK web scene, the BBC would be heart of it. Complete with high blood pressure and a furry aorta.

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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 (http://www.theregister.co.uk/2006/09/14/bt_global_vision/), 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 (http://www.thealarmclock.com/euro/archives/2007/01/3is_finds_the_mobile.html) 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.

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In an over-heated startup environment where networking events, coffee mornings and [gulp] webinars abound it's key to stay mindful of Sturgeon's Law: "Ninety per cent of everything is crud".

We've been here before. The first dotcom boom was a fine validation of Mr Sturgeon's pessimistic stance. Some strong businesses made it to shore on that first wave – mostly glamour-free services like ISPs and security firms. At the webbier end of the spectrum that concerns us, Lastminute.com, gadget retailer Firebox.com and several gambling sites made it through as independents while a thousand others floundered.

Oh yeah, The Reg is still around too.

In a column (http://www.pcmag.com/article2/0,1895,2164136,00.asp) for PC Mag at the beginning of August, veteran US tech pundit John C Dvorak predicts another bust: "Every single person working in the media today who experienced the dot-com bubble in 1999 to 2000 believes that we are going through the exact same process and can expect the exact same results - a bust... Today everything from YouTube to the local church has a social-networking angle. And this doesn't even consider the actual social-networking sites, from MySpace to LinkedIn to Facebook to even Second Life. This scene is totally out of control and will contribute to the collapse for sure."

Not quite every dotcom survivor sees the same pattern. Mike Butcher, the former editor of dotcom flag-waving mag The Industry Standard, and New Media Age told us: "There isn't so much public money involved this time round. You won't see granny's pension fund being invested in an internet startup."

"If a VC loses their shirt, that's their business. It's what venture capital is all about – it's a venture." Butcher has set up Bitesmedia (http://tbites.com/) with the aim of channelling the "pitch hell" of many startup events into a more meaningful discussion.

"In the past in Britain, people in business didn't want to get their hands dirty with people who can code – not the Silicon Valley mindset. That's changing and it's what was meant to happen with the dotcom boom but didn't quite."

The Rt. Hon. Minister for YouTube

What about government support? The newly minted departments for trade and industry might do better (we'll give them the benefit of the doubt) but so far, when it comes to technology, our politicians often prefer not to let facts, or indeed issues, get in the way of a good story. Meaningful discussion gives way to posturing.

Having failed to engage with da yoof via every medium ever, both main parties have claimed to be convinced that YouTube and Facebook are the tools they've been waiting for to involve the Kersal Massive (http://www.youtube.com/watch?v=f6LMpUPRjVQ) in public discourse. Before his promotion to glory in the Foreign Office, Labour's David Miliband was engaged in a battle royale with the opposition to decide who gets social networking the most.

Cameron might have a blog (http://www.webcameron.org.uk/), but Miliband clearly gained the initiative with this recent nonsense by channeling conference magnate Tim O’Reilly:

Instead of citizens acting in isolation, unsure of whether their actions are reciprocated by others, feeling powerless in the face of large organisations and global change, citizens can feel part of a bigger project. They can create a shared willingness to act, their preferences can be aggregated, and can give rise to collective action as well as collective discussion.

Cynics would suggest this is the internet equivalent of Gordon Brown proclaiming himself an Arctic Monkeys fan. Serious lamenters of the lack of government support around new technology might be less charitable. It shows UK tech entrepreneurs they’re on their own, as it ever was, and probably should be.

Scene, not heard

Anyone looking for the kind of blog-walled echo chamber which self-sustains and promotes the current crop of cruddy Valley internet ventures is still going to have a hard time. Equally, good ideas have as decent a shot now as they ever have.

Perhaps we're best off this way. If the Great Californian Web 2.0 dungheap collapses we’ll doubtless suffer but at least the stench of community-wide failure won't carry. Or perhaps it won't collapse but continue to fester long-term – we don't know which is more scary.

Being left alone by hypesters to focus on building a business might be the best chance the likes of Blinkx (http://www.theregister.co.uk/2007/06/25/blinkx_adhoc_contextual_ads/), Skinkers (http://www.theregister.co.uk/2005/04/27/ict_awards/), and the rest have. If not, after a long hiatus, First Tuesday (http://www.firsttuesday.co.uk/) is starting again in September. ®