The UK government recently stated its intention for London's East End to be transformed into a world-leading technology centre to rival Silicon Valley. But, while ‘Silicon Roundabout’ can draw strength from recent start-up successes such as Betfair, Last.fm and Skype, will Britain ever be able to produce the next Facebook, Google or Apple - which last month announced quarterly profits of $4.3 billion? Hot on the heels of Global Entrepreneur Week, Criticaleye asked its Community of Members for their views on how London might one day be able to rival Silicon Valley.
Ray Anderson, CEO and Founder of Bango plc, suggests there is a ‘Greater London sprawl’ - broadly, from Slough in the south-west up to Cambridge in the north-east - that could one day rival the trench of success dug by our Californian cousins. He outlines three key areas where London could play a pivotal role in the UK’s entrepreneurial future:
- Access to finance – While the majority of capital in the Bay is often sourced from long distance, in London there’s no need for the red-eye caused by regular flights to unpalatable timezones, and serious money can pop up and slosh around rather quickly by comparison. Look to Betfair and Moneybookers for examples.
- Access to knowledge – While Silicon Valley has the likes of Stanford and Berkeley, in Oxford and Cambridge London is just 45 minutes away from two of the best universities in the world. This provides access to a great pool of knowledge.
Access to creative – If you’re in creative, London is still the place to be. You can go to Soho and get a team working on a project very quickly, incorporating world leaders in design and advertising. The US is far more dispersed in this context. One route to the success of the technology companies of the future may depend on London’s creative strengths.
As Ray attests, there are some barriers to overcome. “Fundamentally, if Bango was in a hurry to hire 50 specialised staff to work on a specific project, where would we get them?” he asks. “In Silicon Valley, the likes of Google and Twitter can snatch teams within a week, tapping into a pool of specialised talent - people who have already done it - and utilising it for the fast-growth stage.”
Reinvesting capital and talent
“In the UK, most venture capitalists aren’t interested in venturing; they want businesses with established cashflow, which, of course, very few start-ups have,” says Bernard Cragg, Senior Independent Director, Mothercare plc and Associate, Criticaleye. “And the size of the investment and projected returns will not get many of them excited, even though there may be longer-term potential. In Silicon Valley, a lot of angels are prepared to take the risk. They have made money in big, successful companies like Apple and have recycled the cash back into the environment. The culture is so endemic because they recognise that’s the only way to create real value.”
However, more and more angel networks in the UK have become available to fund early-stage start-ups. There are now more second and third time entrepreneurs, creating a cycle of shared common knowledge. Further, with Yahoo! and Google now setting up significant operations in London, the skills base can only improve. This is important in breeding the next generation of successful start-ups.
Focusing on the UK healthcare sector, Rupert Cockcroft, CEO of CancerPartners UK, says: “The majority of highly-skilled professionals employed in the UK healthcare sector are in the NHS, where there is a lack of entrepreneurial spirit. As a result, we are finding that the private sector is consistently driving innovation in healthcare. We succeed when we inspire the skilled professionals to think freely and believe that they can make a difference in their field. If we can un-lock the potential and support it with suitable investment, then there is huge potential.”
Embracing the entrepreneurial spirit
In the US, some of the best entrepreneurs have been failures – it is often seen as a badge of honour. In the UK, by contrast, there’s a mentality of ‘if you fail, you won’t come back’. Creation is gambling - it’s a punt. So, as an entrepreneur, you must be prepared to lose.
“I think Britain suffers from a 'class hangover' that the US does not,” says Mark Weber, Non-executive Chairman of Atticmedia. “Most of the first dotcom ventures, many of which failed, tended to be run by people who were part of the establishment, and had fathers or other relations that would off-set the risks. Silicon Valley has a culture where ideas, and the courage to do things differently, are more important. If people fail, it is not held against them; what matters is determination. In the UK you are lucky if you get one chance, and failure is not acceptable. Britain permits enterprise because we have lower levels of bureaucracy than on the continent, but we are not entrepreneurial in culture. Effectively, we are in the thrall to established ways of doing things. Questioning that is not a part of the way we want to see the world.”
Despite the government’s perceived good intentions towards creating an entrepreneurial Britain, the notion of ‘regulating innovation’ is a difficult one. Indeed, should poor businesses be supported?
“Regrettably, I only see government targets to accelerate business start-ups, and not necessarily profitable business start-ups,” says Sally Wilton, entrepreneurial founder of The Lexi Cinema and etc.venues. “Too often we see the ill equipped being encouraged to fail. Starting, running and growing a business is hard; it is not a soft option and should never be portrayed as such.”
Kelvin Harrison, Chairman of Maxima Holdings plc, says: “In the UK there are many methods for incubating the bright ideas which have the potential to be innovative, whether it’s through universities, technology clusters or large corporations, but the early stages take too long. We need to find ways of accelerating the start-up process, so that we get companies through the early stages more quickly, to the point where they will have to make a decision on whether to continue to try to grow, or cut their losses and try a different idea.”
Using the right networks
Following the start-up stage, Andrew Mearns Spragg, Founder and CTO of bio-tech SME Aquapharm, applied to the Royal Society of Edinburgh Enterprise Fellowship programme. The Society not only provided a year’s funding within a University laboratory environment, but also encouraged Andrew to grow his entrepreneurial idea by thinking more commercially. It also provided the platform for his idea to be peer reviewed by entrepreneurs, VCs and biotech guides in the public and private sector and gave him an opportunity to engage with the wider business audience - access to networks that wouldn’t necessarily have been available to him.
“Each technology sector will have its own specialty partnering or networking events”, says Andrew. “These are fantastic forums to meet your potential partners and or customers. Fundamentally, it’s about gaining access to money and good ideas, which means getting exposure to a range of potential investors. Using the right networks will put you and your business in front of the right people at the right time.”
Of course, there are no silver bullets. As with every networking concept, you get out what you put in. While it’s up to every company to find their way, each needs a leader that will drive their company’s aspirations and navigate them through the pitfalls successfully. In the end, the right mentoring and advice from people who’ve already done it can be invaluable.
From my own experience, one of the main drivers of creating Criticaleye was to address that gap in the market and to link up those that faced similar challenges and ambitions; it’s hard out there for leaders and it can be very lonely at the top. By creating a membership community we knew we could provide leaders with that fundamental ingredient necessary to create rich discussion and workable solutions ... Trust.
In this context, the future for entrepreneurialism in the UK is, on the whole, positive. But, in order to rival the likes of Silicon Valley, UK entrepreneurs must, bottom line, continue to come up with more innovative ways of making money. For its part, the business community must succeed in perpetuating a cycle that reinvests its capital and talent and makes better use of its commercial and knowledge networks.
Please get in touch if you have any comments about the issues raised here.
I hope to see you soon,