Dean Hopkins, CEO at OneEleven, on what London can learn from Toronto’s tech scaleup scene.
Amid the praise for the UK’s tech startup success stories of recent years, there has been a nagging criticism that founders have a tendency to sell themselves short by exiting ‘too early’. While there is evidently a combination of factors behind this ‘early exit syndrome’, one often-touted reason is a lack of ambition. To my mind, that’s harsh.
Of course, the UK and Europe have produced unicorns (from Spotify to Skyscanner, Darktrace to Monzo), other success stories that compete on an equal footing with Silicon Valley peers, and others still that have moved to the Valley and grown. But it’s understandable that some founders might be intimidated by the idea that success is a question of ‘the Silicon Valley way or the highway’, and decide to hand over the reins.
While Silicon Valley remains the gold standard, individual founders and the UK scaleup ecosystem as a whole could benefit from redirecting their gaze as they search for the most suitable model to follow. Toronto may sound like a left-field suggestion. But as a native who’s worked in and around the tech and innovation community there for the past 25 years, I have seen the city overcome a number of systemic issues as it has grown into a top-tier global tech hub. London is obviously already at the top table – but the more I hear people talk about how its founders and its community need to be more like Silicon Valley, the more I think there are still some valuable lessons to be learned by looking to my hometown.
One of the formative steps in the creation of the Toronto scaleup ecosystem that is currently ‘having a moment’ was was – perhaps counterintuitively – the spectacular collapse of two of Canada’s biggest tech exports, RIM and Nortel. Suddenly thousands of talented individuals who had already been on one rapid scaleup journey were parachuted back into the ecosystem with the experience they needed to begin the journey afresh, either with their own ventures or local startups that they took to the next level.
This nascent ecosystem was augmented by highly effective commercial collaborations between government, academia, and corporates to create major innovation hubs – the likes of MaRS, Vector Institute, and OCE – that banded together to speak about Toronto and its ecosystem with a single voice and message. For all the individual success stories, from the outside looking in, this unity of vision and voice is something that London is still only part of the way to achieving, with a number of different stakeholders advancing different agendas or competing to tell the same story rather than speaking together.
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Meanwhile, the decision of investment pioneers like OMERS, a major Canadian pension fund, to plough investment into scaleups put Toronto on the map for other investors from the US and further afield, contributing to the rise of a robust venture investment climate across all stages of growth, not just at the upper end of the spectrum. In the UK now, as there was in Canada then, there is a funding gap between seed and Series A – a pivotal time in a company’s transition from startup to scaleup mode – that results in too many companies ‘falling through the cracks’ and failing to realise their full potential.
Finally, Canadian entrepreneurs that had successfully built and exited ventures – like many UK founders, typically in Silicon Valley in the later stages – returned to Toronto to build their own funds or other support infrastructure and offer the next generation of scaling businesses the value of their experience alongside that of their capital.
With those conditions in place – plus fertile ground for innovation in the shape of a deep tech talent pool and a safe and relatively inexpensive city to live and work in – it wasn’t until recently that the final ingredient came into place: a global success mindset. Toronto companies no longer see local success as the peak of their ambitions. Their heroes are globally successful Canadians such as Elon Musk, Chamath Palihapitiya (of AOL, Facebook, Social Capital), and Bob Young (Redhat), who have enabled the current generation of ambitious leaders to see the world as their oyster.
With these lessons in mind, what does this outsider see that the UK ecosystem needs to do next? It has already developed something of the global success mindset, recognising that successes to rival Silicon Valley can be built here. And it has embraced something it took Toronto longer than it should have to come to terms with: attracting and absorbing the global tech giants, and the inspiration and access to expertise they bring with them as people inevitably leave to start their own tech businesses or funds.
Where the UK needs to improve, however, is in attracting back into its ecosystem the talent that left to scale their businesses in Silicon Valley, or left to join existing scaleups there, harnessing their experiences and making sure they see the UK as the best place to start their next venture. It needs to build stronger infrastructure – money, but also space, and crucially time – to ensure that companies making the difficult jump from seed to Series A have the support they need as their focus shifts from building an MVP to building an entire business. And it needs to establish greater collective pride in its successes and its potential. Toronto created a single voice with which to speak to the world but, at least from the outside looking in, as I have been so far, I don’t see the same thing in London.
London is no longer the poor cousin to Silicon Valley, and like Toronto, can mobilise its ecosystem in a few key ways that will build on what is already an enviable set of strengths. Trust me, I’m a Canadian.