ON A CHILLY NIGHT on 7th December 2002, at around 8pm, a faulty fuse box burst into flames in a building off Hastie’s Close in Edinburgh’s Cowgate, setting off a fire which quickly spread to adjacent buildings. The subsequent blaze raged for the best part of three days, involved 150 firefighters, and displaced over 100 residents from their homes. At the end of it all 13 buildings had been completely destroyed tearing a huge chunk out of the heart of Edinburgh’s historic old town.

This disaster became known as the ‘Gilded Balloon fire’ after the Fringe Festival venue in the Cowgate which was lost in the blaze; most famous as a stand-up venue where many of the UK’s top comedy acts had been discovered over the years.

Less famous than the Gilded Balloon was a building up above on Edinburgh’s South Bridge where a former department store had been converted into offices for the Artificial Intelligence department of the University of Edinburgh.

The loss of this department was a disaster. In particular, Edinburgh had been a pioneering centre for the study of Artificial Intelligence, and the fire completely destroyed a library dedicated to this subject which had been built up from the 1960s. Much of what was lost was unique and could never be replaced.

However what happened next was much more positive. Edinburgh University decided to bring forward plans to bring all of its various computer science research functions – a subject which at Edinburgh is called ‘Informatics’ – into a new building to be constructed on a muddy car park at Crichton Street on the corner of George Square. Until then Edinburgh’s Informatics research had been scattered among several buildings across the city.

The resulting Informatics Building became a great new addition to the technology landscape of Edinburgh. To avoid paying VAT on the building the University was restricted to only conduct academic research on the site, but it was designed with attractive conference and meetings facilities on its ground floor. An accidental benefit of this tax settlement is that lots of networking meetings were held there at no cost – because charging would breach their non-VAT status.

At the same time, the building opposite, the Appleton Tower was reconfigured to create flexible ‘incubator’ space on its upper three floors and budding entrepreneurs were encouraged to start technology companies in these offices. Over 40 or so new companies have actually started in this space, including FanDuel, Edinburgh’s first ‘Unicorn’ (a company subsequently valued at over $1bn).

Edinburgh University, in conjunction with Scottish Enterprise, also set up a unit, Informatics Ventures (IV), with the remit of encouraging entrepreneurial behaviour amongst its computer scientists and others wishing to start technology businesses. IV set up mentoring, support and networking meetings including high profile talks from successful entrepreneurs and has run Scotland’s investment conference ‘Engage Invest Exploit (EIE)’ annually in Edinburgh and in London for several years now.

Edinburgh’s Informatics is recognized as the largest such centre anywhere in Europe with over 500 researchers, larger than MIT or Stanford, and its research is rated as the best in the UK. As a result, an impressive collection of high growth technology businesses have settled nearby, led by FanDuel and Skyscanner but also including the 60+ businesses in CodeBase and TechCube, and international giants such as Amazon with its innovative Edinburgh research centre, and Rockstar North, the creators of Grand Theft Auto, the world’s largest game franchise.

It makes you ponder what might have happened if that fuse box hadn’t failed back in 2002.

Ian Ritchie chairs Informatics Ventures at the University of Edinburgh