12/03/2012 21:48 GMT | Updated 12/05/2012 10:12 BST

Time to Celebrate East London's Silicon Roundabout

Inner-city roundabouts are not the most obvious places to look for the next generation of digital entrepreneurs, but Old Street is not your usual roundabout.

Dubbed the Silicon Roundabout, this unlovely East London junction is at the heart of a rapidly expanding cluster of small digital and media companies hungry to emulate the success of established giants like Facebook, Twitter and Google.

Despite the economic gloom, their number leapt from around 200 to more than 600 in the last year alone.

Together with the London Assembly's Economy, Culture and Sport Committee, I recently visited the area and met with technology experts, government figures and entrepreneurs from the UK and abroad who are choosing to make East London their home.

Again and again, we heard the same stories. Mostly, small and medium sized - more than half employ 10 people or less - they like the area because of the combination of cheap, flexible rents, good transport links and proximity to one another and the City.

Many of them are setting up at 'incubator spaces' designed for start-ups. A good example is Tech Hub on City Road. It offers cheap, flexible accommodation for digital entrepreneurs, in some cases just a desk, or a meeting room rented by the hour, along with the opportunity for networking and joint working. The place radiates energy.

Speaking to the men and women running these businesses, it was impossible not to be impressed by their drive, determination and optimism. Many of them spoke of increasing capacity - one by 100% in the last year alone - incredible in the current economic climate.

Squeezed between the dynamism of the City and some of London's poorest communities in Hackney, Old Street is an area that has been transformed in recent years.

It's changed completely since I worked there in the 80s. Gone are the run-down shops, empty warehouses and feeling of desolation, replaced by the buzz of restaurants, vibrant nightlife and new businesses.

The question is: what can the government and the Mayor do to help? In November 2010 the prime minister established the Tech City Investment Organisation, with a mandate to shine a spotlight and drive investment in the area.

While a lot of support comes from the big companies - like Google investing in a new incubator space in the hope of finding the next big thing - government can do its bit by boosting the reputation of the area and putting it on the map.

The Mayor may have an important role building bridges with local colleges and education providers to ensure that local young people have the right skills for the sector. In particular, apprenticeship opportunities would be a fantastic boost for young people growing up nearby in some of London's most deprived communities.

He can also use his high-profile role to attract new businesses and encourage large technology companies to invest, while keeping the area attractive for new starters.

Old Street is a unique place where low-budget creativity, technological savvy and high finance come together on the outskirts of the City. Its cheaper rents and flexible spaces allow small businesses to expand and prosper.

Forget Silicon Valley - this could only happen in London.