Can 'Silicon Roundabout' challenge Silicon Valley?

Hundreds of tech firms are based near the "Silicon roundabout" in east London

Can London really build the kind of entrepreneurial hub which could challenge California's tech dominance?

They are brimming with confidence. They have the latest technology at their disposal. And they are looking for serious backers to fund their digital ideas.

"I'm skipping lunch," one announces, hunched over a laptop. "I'll take a break when I'm either rich or dead."

These internet entrepreneurs are not in Silicon Valley, or even New York. They are in London, at an event called Seedcamp Week - a sort of networking event, venture capital competition and problem-solving session all rolled into one.

The ambition of the 20 start-ups at Seedcamp is matched by the breadth of industries they hope to disrupt. Crashpadder is a service taking on hotels, while FarmerOn wants to harness online tools to manage cows, crops and tractors.

TransferWise is a user-to-user foreign exchange site which cuts out banks and their commissions.

'Organic' growth

"Since our launch in January, we've handled £3m in transfers," says TransferWise co-founder Kristo Kaarmann. "We've saved 100,000 euros (£88,000) for our customers and they love us for it."

"For us, this week is about speaking to people and getting their advice about how we grow faster and make it a sustainable global business," he says.

TransferWise is just one of the hundreds of companies that are based near so-called "Silicon Roundabout" in east London.

Before the recent flurry of Web 2.0 startups, it was simply Old Street Roundabout, a notorious - and notoriously ugly - traffic blackspot.

Around this shabby, hip neighbourhood, hundreds of small technology companies have started up this year alone, thumbing their noses at the economic gloom around them and hoping to build tech companies to compete with the world's best.

The government has noticed. It has declared a swath of east London "Tech City UK", and hopes that the roundabout magic will spread all the way out to the Olympic Village in Stratford, more than three miles away.

But Eric Van Der Kleij, Tech City's "entrepreneur-in-residence", insists that the government will keep a light touch:

"Tech City is one of the fastest-growing technology clusters in Europe at the moment," he says. "It's entirely organic... the companies that identified the Old Street Roundabout area of London as the right home for them did so naturally."

He has no doubt about what kicked off the start-up boom - by his estimate, the number of new companies has doubled in under a year.

"It's such an attractive area, and fun to be in," he says. "Where we are now around Old Street Roundabout, if you did an hour's walk you would come to 100 art galleries, and the culture of this area is what makes it so attractive to the creative classes."

Some entrepreneurs bristle at the name even as they extol the tech virtues of the capital. Alex Asseily started Jawbone, a mobile phone products company, in California. But when it came time to start a new venture, he returned to London.

"We don't make any silicon in London," he says. "And Silicon Valley has held on to the name because they really did make silicon and the semiconductor industry really did start there.

"But it's valuable to start thinking what is it that London really does well."

Different flavour

"London is at the intersection of Europe and North America.

"Americans feel comfortable here, it's a place where Europeans converge to do business, people from the Middle East come and of course people from the Far East come as well.

"What better place to have global ambitions than the global capital?"

One of the biggest hits of the new generation of London tech businesses is Mind Candy, creators of Moshi Monsters, a social network and game for under-13-year-olds.

Founder Michael Acton Smith is an industry veteran who started his first tech business in the 90s. He hit a wall when Mind Candy's first big product, a complex online game, was a commercial failure.

Moshi Monsters was his last throw of the dice, but a good one - it now has 50 million tiny users.

"I love London - there's a great buzz and energy here at the moment," he says. "A lot of my friends are moving to build their businesses in Silicon Valley, but while I like visiting there, I'd rather build my business here."

Spend some time on the fringes of the City of London, in old warehouses with creaky staircases and broken lifts, and you will definitely notice the companies here have a slightly different flavour than their Californian counterparts.

Many focus on art, design or music, such as early success story Last.fm, an online music recommendation service which was bought by American giant CBS for £140m in 2007.

Others are lifestyle-focused businesses hoping to create a new generation of social networks.

WAYN.com - the acronym stands for "Where Are You Now?" - began life as a travel network. It has since broadened its appeal, according to co-founder Jerome Touze, to "people who want to do stuff".

"If you look at our business, we are more of a media company than a technology company," he says.

"It makes a great deal of sense for us to be based in London, and I'm not convinced that being based in Silicon Valley would make any difference."

From a slow start early in the last decade, WAYN now has more than 17 million users.

However, Touze does admit that funding and attention would probably have come more quickly in Silicon Valley, California.

And along with the relatively slow speed of growth come other big questions.

Is the boom really a bubble, ready to burst just like the first tech bubble a decade ago?

Will British tech companies stay here to grow instead of, as has been the pattern, being sold to American firms?

Can London really build the kind of Silicon Valley machine - including entrepreneurs, developers, and different types of investors - that is the envy of the world?

Those are some serious challenges, but they don't seem to bother the entrepreneurs at Seedcamp Week very much.

They are too busy working hard, right through lunch.

In Business is on BBC Radio 4 on on Thursday 8 September at 20:30 BST and Sunday 11 September at 21:30 BST. Or listen via the Radio 4 website or download the programme podcast.