UK Diary: Thursday – A Visit To Accel Partners – UK Is Tough On Startups

by on July 16, 2009 at 5:11 pm

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Thursday morning the Traveling Geeks head to Accel Partners, one of the top European VC firms, to hear presentations from:

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  • Errol Damelin, founder and CEO of Wonga

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  • Kristian Segerstrale, founder and CEO of Playfish

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  • John Newton, founder, Chairman and CTO of Alfresco

Seatwave

  • Joe Cohen, Founder and CEO of Seatwave

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  • Michael Smith , Founder and CEO of  MindCandy

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[Please see Susan Bratton: http://blogs.personallifemedia.com/dishymix/accel-partners-london-hosts-the-traveling-geeks-tg2009-who-is-coming-to-lunch-find-out/2009/07/07/ ]

Accel is still making investments, which is very rare among European VC firms (and Silicon Valley firms too).

I chat with John Newton, an American based in London and CEo of Alfresco, and also Joe Cohen from Seatwave, about the UK startup scene. Here are some highlights:

– It is much harder to found and run a startup in the UK.

– Government policies do not favor startups, there are unfavorable tax provisions for stock options. And the government doesn’t get the digital economy.

– It is hard to find the right people with the right skills in the UK and they cost more.

– Government buys software from the large vendors, very little from startups, 85 per cent of government spending on IT goes to the top 8 US vendors.

– Large US companies headquartered in London tend to tie up much of the top local talent.

– Some UK startups are restructuring outside of the country to take advantage of more favorable tax and other conditions.

– London has a huge number of foreign nationals. You can run a foreign office from the UK by hiring any nationality, it reduces need for larger staffs in local regional offices.

– Risk taking in the UK is changing for the better.

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