It’s Christmas party season so London’s entrepreneurs are right now getting pissed on alcohol paid for by whichever office space or “strategic partner” is laying on the rancid mulled wine or festive cocktails. The conversations they’ll be having at these Christmas parties will be the same ones that plague them the rest of the year- mainly chipper but ultimately bleak ruminations on what their startups are lacking right now. There’s an old saying that an entrepreneur must always put on a happy face and say “we’re killing it” when asked how their company’s doing. In America, where I travelled recently, this was definitely the case. Here in the UK, where modesty and mediocrity have long been popular bedfellows, conversation soon turns to two areas which effect all London startups: Lack of funds and lack of talent.
Firstly, let’s talk about lack of talent. Head down to the basement at Google Campus (the beating heart of Tech City in London), and you’ll find a noticeboard crammed with “DEVELOPER URGENTLY NEEDED PLEASE HELP US” posts stuck on top of the other. There is a massive skill shortage that London needs to sort out in 2015. They can not fill those very specific jobs fast enough. Even more worrying, a developer friend of mine warned me “The best developers have given up hope on working for startups for equity on the off-chance they’ll get big and cash out- many are just working for agencies instead.” One program has sprung up, Startup Institute, expanding to London recently and aims to solve this problem by running an intensive two-month course to help people gain the skills and mindset that startups are looking for, helping plug the gaps needed in areas like Web design, development, sales, or technical marketing. These jobs are normally fairly well-paid, and still not enough people are applying. More talent is badly needed.
Tied to lack of talent is the funding gap. The SEIS/EIS scheme (basically, tax breaks for individuals or companies who invest in early stage companies) has meant raising the first £150,000 is much easier than it used to be. As Techstars’ Jen Lapinski once said to me: “If you can’t raise an SEIS round, you probably shouldn’t be an entrepreneur, go and do something else.”
However, the problems begin once you’ve had that early round. Yes, there are a record number of investors now available, but they sit squarely in the Series A (Around £1 million+) range. There’s very few investors in the £150,000 to £1 million bracket, meaning startups can’t afford to pay for talent or have to be extremely careful with their money. The London co-investment fund is a good start but there needs to be many more groups available to close this gap that the aforementioned entrepreneurs are sweating about.
On the face of it, meetups, networking events, and parties seem to indicate a growing and vibrant community of like-minded people. However, it would be interesting to study the return most people/companies get from these events. It irks me to say it, but, as Brits, we hate it when our friends become successful, as Morrissey once said. Listen to how people in London’s Technology scene talk about successful companies, you’ll hear a variation of “they only got big because…”, “They got lucky,” or some other story which discredits the company in question.
More generally, successes involving UK and European companies are not celebrated in the press as much as big exits or funding rounds from America. Heard the one about the Spanish startup who sold to Vodafone for $10 billion earlier this year? Of course not, it was barely mentioned in tech or mainstream press, let alone celebrated.
What does this mean at ground level? There are many different groups in East London, and they’re not actively helping each other. My company did Techstars (an accelerator) earlier this year and Techstars’ motto was “give first.” It was amazing how much all the teams shared contacts, socialised together, and helped each other out. This, spread city-wide, would be dynamite.
Right now, London’s technology scene still seems very fragmented. Tech London Advocates does a good job of bringing influential people together, but a more city-wide change in attitude is needed in making sure everyone knows about and has access to everything that’s happening and available in London, including information about key events, grants, and new investment funds. Centralised information available to all would mean a more inclusive community for everyone involved in tech in London.
With an increase in skilled workers, funding, and Brits’ attitude to helping and community becoming just a bit more like our American friends across the pond, Tech City could finally reach its potential, and see a lot more cheer at Christmas parties this time next year.