Since our time working in the startup scene and attending countless entrepreneurial presentations and events in London and abroad, we have been getting a clear sense of what makes London a truly special place to build a startup. First, it is where we believe to be the best place in the world to conduct a global business, at the intersection of the Americas and Asia. Second, having lived in the capital for close to 10 years, we have built personal and professional networks around us.
In the recent Startup Ecosystem Report 2012 by Startup Genome and Telefonica Digital, it concluded that London was the 7th best place in the world to build a startup.
And although London comes close to Silicon Valley in some aspects, for example with regards to the overall support index (quality of the startup ecosystem's support network), there are several factors that are significantly different when London is compared to Silicon Valley's startup landscape. Here are three findings from the study that stood out for me in particular:
• Without question London has a funding gap for companies trying to get off the ground, with "81% less capital raised by startups before product market fit than startups in Silicon Valley."
• London's entrepreneurs are said to be less ambitious ("Silicon Valley entrepreneurs are 120% more likely to estimate their market size as greater than $10 billion compared to entrepreneurs in London) and in general more risk-averse than their US counterparts. Perhaps not surprisingly, startups in Silicon Valley are almost 2x less likely to estimate their market size to be less than $100 million."
• And interestingly, when considering founder motivation, "entrepreneurs in London are more motivated by building a great product, whereas Silicon Valley has 30% more founders that want to change the world. 2x as many founders in London are more concerned with wanting to make a quick flip compared to those in Silicon Valley or New York."
Despite what might seem to skeptics to be insurmountable obstacles for London in becoming a top 5 destination for global entrepreneurial ventures, I wanted to focus on what I believe are '3 Small Acts of a Start-up nation' that London should better address in order to capture the vast potential that resides within its creative quarters. The following are also attributes that London did not fare as well as when compared to Silicon Valley, but I believe are the things that make a truly great startup culture nation:
In the report London fared well, second only to Silicon Valley, when it came to the overall support index, which measures the quality of the startup ecosystem's support network, including the prevalence of mentorship, service providers and types of funding sources. But when looking solely at mentorship as a factor in a city's attractiveness to entrepreneurship, it seems the ecosystems in Silicon Valley as well as New York City have more helpful mentors than the London ecosystem.
I believe that London can do a lot more with regards to mentorship for entrepreneurs.
At universities as well as graduate schools across England it would be extremely helpful to have entrepreneurs volunteer their time to help students as mentors. Often times, we were at a loss where to find information and resorted to an internet search, spending hours looking for one piece of information such as issues surrounding regulatory requirements.
Openness to failure
In Singer's and Senor's, Start-up Nation: The Story of Israel's Economic Miracle, the authors talk about how successes in the country are not celebrated in stupendous style but neither are failures made an example of and frowned upon. In Silicon Valley, entrepreneurs who have gone through failures are looked at with respect, in that they have experience. A failure is looked at as a "badge of honour" and nothing to be ashamed of.
We require more of this attitude in London so that entrepreneurs do not fear starting their dream even before they have begun.
Pay it Forward Culture
London might take cue from SV when it comes to supporting fellow entrepreneurs and not wanting anything in return.
People in Silicon Valley really believe in "pay it forward". It's not all transactional and tit-for-tat. Folks help each other and those not as far along as them. It's also the easiest place in the world to start a company. Everyone is here to help you kick ass. - David Weekly, Founder of PBworks
Whilst meeting a friend for coffee recently, she related how she had attended a dinner comprised of alumni from Harvard, Stanford, London Business School, and a few other MBA schools.
She noted something specific of the Harvard Business School Alumni which was quite remarkable:
"When a colleague emails any one of us for advice or to meet, regardless of which HBS class they graduated from, it is incumbent upon us to not only write back but also to help in any way we can. When we required support the same Alumni pool assisted us in any way they could so we feel it's only right to do the same."
I felt this was an incredibly powerful idea, one that I felt London needed just a few nudges on.
These '3 Small Acts of a Startup Nation' may not close London's funding gap, but I believe are the essential ingredients of a great startup culture and demonstrate how close London is to becoming one in the near future.