London has emerged as the hottest tech start-up city in Europe. Often mentioned in the same breath as Silicon Valley, Boston and Tel Aviv, the language, lifestyle and a deep and varied talent pool make London a magnet for ambitious entrepreneurs. However, what London really needs now is a number of headline-grabbing exits or IPOs in order to make the leap to a self-sufficient ecosystem where success begets success.
According to Startup Genome’s report into the world’s top 20 start-up ecosystems, there are 42% fewer serial entrepreneurs in London than in Silicon Valley. Not having benefitted from a number of substantial “exits”, London is missing the pool of newly enriched entrepreneurs who then become prolific investors themselves, offering not just money but experience to future generations of start-ups.
And yes, while we have undoubtedly seen some notable successes over the last couple of years (for example, Twitter’s acquisition of TweetDeck for $40m, Yahoo!’s purchase of Summly for $30m, and Reed Elsevier’s acquisition of Mendeley for $70m), these are hardly Facebook or Twitter type events – Facebook’s IPO alone created over 1,000 millionaires, many of whom are now spending their fortunes supporting other start-ups.
The good news is that, as we mentioned in last week’s media:tech Tuesday, a number of London-based tech companies are planning flotations imminently – King.com is likely to be valued at more than $5bn, and Shazam is aiming for $1bn. With a number of other home-grown businesses such as Wonga and Mind Candy beginning to reach critical mass too, the pipeline is definitely looking encouraging for London’s maturing start-up scene.