This piece is part of a feature written for the latest issue of Tech City News called: ‘the tech ecosystem formerly known as London’. ‘Tech City’ was first acknowledged by David Cameron in a speech on 4 November 2010, five years ago today, but we know lots was happening before that. Here’s part two of a three-parter. This post looks at 2005 to 2010, featuring Huddle CMO Alastair Mitchell. Check out part one with LastFM’s Martin Stiksel here and subscribe to get your free print copy here.
Hot on the heels of somewhat unwilling Tech City leaders like LastFM were the likes of Mimecast, Wonga and Huddle.
Founded back in 2006, online collaborator Huddle co-habited with six other VC-backed companies, including Skimlinks, in what is now the building site that will become the, rather ominously named, White Collar Factory on Old Street Roundabout.
“We got kicked out so they could redevelop the building,” says Alastair Mitchell, CMO and cofounder of Huddle. “And office space in Shoreditch is just too hard to get hold of for bigger businesses.
“But five years ago, there were questions around whether the biggest EU tech hub would be Berlin, Paris, Helsinki. And it’s clear London is now the place to go to start your business in Europe.”
Yoyo and wiGroup merge to create Yoyo-Branded payments
Huddle has had to move out to Aldgate and is about to upsize, yet again, which is no bad thing, when you think about it.
“London today is certainly a more mature ecosystem. The fact that we’re even talking about European unicorns is an example of a good five years.”
Despite nearly 10 years in the business, Mitchell knows that “cloud collaboration” is yet to become a mainstream idea, although everyone with an internet connection in the UK is probably using the cloud every single day.
“The challenge is that everyone is trying to do a lot of today’s work with yesterday’s technology. Most businesses in New York and San Francisco are entirely SaaS.”
Brighteye Ventures announces $54m close of second fund
And as around half of our workforce will be staffed by millennials by 2020, he believes we’re going to see a fundamental shift.
“They’re the digital native generation, social and collaborative by nature, not just sat at desks using Outlook. It’s clear the enterprise IT stack needs a good shake.”
What Mitchell believes London has been good at in the past half-decade is “playing to its strengths. Whether it’s the NHS and health, retail, as we have the most sophisticated retail market in the world, or fintech. This reflects what Britain is really good at.”
In its Agiletowns report, Deloitte estimates 44,000 people now work in fintech, of some 200,000 people Oxford Economics says work in London’s tech sector.
Queuing app ufirst launches in the UK
“But the single-biggest barrier is that there is still not enough money for late-stage startups and we’ve been saying this for the past five years,” Mitchell says.
“There has been a massive increase in seed funding, accelerators, angels and VC funds in the past five years,” adds Simon Menashy, investment director at MMC.
“Lots of new capital, support and mentoring has come into the market that means London can create and support ecosystem of thousands a year of startups – developing into proper little companies – and we are the lucky recipients of five years of increasing prospects.”
But he echoes Huddle’s concern. “The area that has changed the least is Series A and beyond. We look after a $100m fund and around $20m of that is invested in the UK. There are only around 10 VCs in London operating at this level but I would like to see 10 more.”
“All the unicorns have been funded outside the UK,” Mitchell continues, emphasising his company’s plan to “hopefully float or exit here. The message is: you should start your business in London, but ultimately move somewhere else, which is a shame. It should be: start in London, get investment in London, grow, grow, grow.”