Archive for 'Traveling Geeks'
UK Entrepreneurs: Get Your Funding While You Still Can
[Cross-posted from TechCrunch]
You think you have it bad,
Mr.-Silicon-Valley-entrepreneur-trolling-Sand-Hilll-Road-for-cash? Try
life on the other side of the pond.
Out of 39 firms that were active investors in British start-ups over
the last five years, only thirteen venture firms have £5 million or
more left in their coffers to invest, according to NESTA, the UK agency that advocates for start-ups and also sponsored the recent Traveling Geeks blogger tour.
That’s right: All but thirteen firms in the United Kingdom are
either completely tapped out or have committed the rest of their funds
for follow-on investments in existing portfolio companies. In total,
NESTA estimates there’s about £400 million left that’s uncommitted
among the thirteen, with only half of that available for brand-new
series A deals. To put that into perspective, there’s roughly the same
amount of money in the fund Marc Andreessen just closed than there is for new companies in the entire United Kingdom right now.
This is coinciding with a precipitous drop in UK firms closing on
new funds thanks to the global credit crunch. In 2008, only seven firms
closed new funds, and NESTA expects fundraising to be even weaker in
2009.
As most people know, I’m a pretty big advocate of the idea that many
of the next great high-growth companies will be founded outside of the
U.S., but these stats starkly demonstrate a undeniable advantage of
being Valley-based. Even when fundraising slows and VCs save bigger
reserves than usual for current investments, there are still billions
sloshing around to fund new deals. Sure, it’s hard during times like
these even in the Valley, but raising venture capital should be hard.
As with most research reports on the venture business, it’s the
trend line that’s important to note here. It’s probable that NESTA
isn’t counting a firm here or there. But it can’t be too far off.
Indeed, the stat explains a lot of the anecdotal evidence that hit me
in the face as soon as I arrived in London two weeks ago. Many of the
entrepreneurs who’d pitched me on my last visit to London in November
have already shuttered their companies and were unsure of what to do
next. I have exactly one friend in Silicon Valley who has been forced
to that point.
Even the good UK early stage names are struggling to close deals. It took AlertMe—a hot energy home monitoring company that won The TechCrunch Europa
for best clean tech company last week—a whopping nine months to raise
money almost landing the company in bankruptcy. (Index Ventures and
others finally snapped up the deal a few months ago.) “I don’t want to go through that again,” the very polite and British CEO Pilgrim Beart demurred.
It’s that kind of bleak desperation that lead the infamous Paul Carr to pronounce the UK Internet scene dead….just before his own column in the Guardian became its own victim of the economy a few days later. (See Mr. Butcher's TechCrunchEurope rebuttal here.)
Indeed “the scene” may be dead, but there’s an upside here. The
companies that are still around have a much greater emphasis than
Valley companies on making money. The Traveling Geek contingent went to
Accel’s London office to meet with a handful of start-ups, and each one
emphasized revenue and profits in their five-minute elevator pitches.
One that caught me by surprise was Michael Smith’s Moshi Monsters,
a social network/ virtual game for kids. Cute idea, but sounds like it
should be road kill in this environment, right? Nope. Its revenues are
growing 35% month-over-month, it has 85% gross margins, and just five
months after launching the site is cash flow positive. Nicely done,
gents. (BTW, Smith isn’t all business. His house was the setting of those famous Scoble pictures…)
Indeed, there’s always something healthy about startups having to
work within constraints. There will be fewer of them, but it’s possible
that the companies that make it in this environment could well make up
one of the most promising crops of UK companies we’ve ever seen. After
all, Skype was laughed out of VCs’ offices when it started in the wake
of the dot com bust.
In the coming days, I’ll be writing several more posts about the London companies that impressed me the most. Stay tuned.
Renee Blodgett & Sarah Lacy discuss the London Tech Scene
While participating in the Traveling Geeks week in London, and checking out the start-up scene in the UK, I had the opportunity to interview a few of my fellow travelers about their impressions of the London tech scene. In between our busy schedule, I appreciated the chance to speak to Renee Blodgett and Sarah Lacy.
Renee Blodgett is the CEO of Magic Sauce Media, a strategic communications, social media, and branding consultancy, co-founder of Traveling Geeks, founder and producer of We Blog the World, a blog dedicated to global storytelling and the latest developments in social, cultural and technology trends and blogger of Down the Avenue .
Renee discusses the difference between UK and Silicon Valley start ups. Her impression of the London tech scene, after having previously lived in England, was that the UK is not really a start-up culture. They are more reserved and still trying to get their head around social media and remain reliant on traditional media, like radio and television. According to Blodgett, the UK is not really a start-up culture.
Sarah Lacy is the author of Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0. She is also Editor At Large at TechCrunch, a reporter for BusinessWeek, and also co-hosts the Yahoo! Tech Ticker.
Lacy provides some important insights on the current state of the economy. She points out that UK-based start ups are feeling the consequences of the economic downtown far more than start ups in Silicon Valley. A long-time observer of the UK tech scene, Lacy has seen that many start ups have failed, yet there is definitely potential to excel. Several companies have done very well. What is the secret to their success? A strong business model, concern for metrics, and a focus on profitability. Lacy also agrees with Blodgett that the UK isn’t as into social media. While Israelis love social media and are relentless, the British are more reserved and restrained.
An Interview with Zemanta’s Tori & Qype’s Hunter
Talking to Zemanta’s Andraz Tori and Qype’s Andrew Hunter. Click play to hear their story.
A Chat with BT Openzone’s Chris Bruce
Below I’m chatting with BT Openzone’s CEO Chris Bruce at the top of BT Tower in London last week during a dinner BT hosted for the Traveling Geeks.
We used their dongles on the road from London to Cambridge and back again. It’s essentially the equivalent of the Verizon EVDO card I have for my Thinkpad.
£9.99 gives you the dongle and works for people who have a Home Broadband (ADSL) Option 3 connection – with 1Gig 3G access for 18 months and an array of other features including unlimited wifi.
Prices for other packages vary depending of amount of 3G Gigs per monthly usage and features of the ADSL broadband.
For pure pre-pay customers, the cost of the dongle cannot be covered by a monthly usage charge and so the cost is obviously higher.
UK Diary: Friday – Cambridge Startups
http://www.youtube.com/watch?v=uo_aUaJlAFA
Friday and the Traveling Geeks are in Cambridge, the innovation capital of Europe.
After presentations by Cambridge university representatives and also from government agencies helping startups, the Traveling Geeks take part in a panel and also hear presentations from local startups.
UK Diary: Friday – Cambridge Consultants, Nokia And Microsoft Research Labs
http://www.youtube.com/watch?v=iT3hro-BsQc
Friday afternoon the Traveling Geeks visit Cambridge Consultants and visit the William Gates III building for meetings with researchers from Nokia Labs and Microsoft Research Labs (MRL).
Cambridge Consultants has helped bring to market products such as:
– Virtually waterless washing machine
Low cost cellular base stations.
More here.
The Microsoft Research Labs are part of the academic community at Cambridge university and the work is open and peer-reviewed. In the video our guide is Cambridge university lecturer and successful entrepreneur Jack Lang, also Ken Wood, deputy director of MRL, Tim Regan, Research SDE at MRL, and presentations from their colleagues. The video also shows some of Microsoft’s research projects.
Skimlinks Navarro & Kwaga’s Leval and Bezy
At Seedcamp in London this month, I talk to Skimlink’s CEO Alicia Navarro and Kwaga’s founders Philipe Leval and Eric Bezy.
UK Diary: Friday – Cambridge Startups
http://www.youtube.com/watch?v=uo_aUaJlAFA
Friday and the Traveling Geeks are in Cambridge, the innovation capital of Europe.
After presentations by Cambridge university representatives and also from government agencies helping startups, the Traveling Geeks take part in a panel and also hear presentations from local startups:
– Alert Me
– Taptu
Moshi Monsters: Virtual World for Kids
I spent some time talking to MindCandy’s Michael Acton Smith talking about their primary brand: Moshi Monsters, which is essentially a Facebook mixed with virtual world experience for kids.
He talks about how kids can create pet monsters, participate in games and contests, and engage with their friends in various ways that are safe and secure.
We also dive into marketing and what kinds of things they have been experiencing with as a young company only out of the gate just over a year. It includes Facebook advertising as well as traditional TV. Learn more in my chat with Michael below.
British Consulate General’s Matthew Whiteley
A chat with the British Consulate-General of Los Angeles who talks about his interest in U.S. companies wishing to expand their business into the U.K. market.
