3 ms·

It is great that you survived this near-death experience. From my experience VC's and Angels from Europe and US are two completely different animals. For fun ju

by elmar 12y ago

It is great that you survived this near-death experience. From my experience VC's and Angels from Europe and US are two completely different animals. For fun just watch Dragons Den UK vs. Shark Thank US. Venture capital firms in Europe vs. America: The under performers http://iveybusinessjournal.com/publication/venture-capital-firms-in-europe-vs-america-the-under-performers/ http://iveybusinessjournal.com/publication/venture-capital-f...

madaxe_again 12y ago
It's a very different kettle of fish. In the UK, investment in tech startups is pretty barren - investment tends to be placed more readily with traditional engineering ventures - weapons, aerospace, material products - but for software... not so much - or at any rate, not in the model of angel rounds, etc. The scene in the UK is rather more "be bought" - people aren't anywhere near as willing to pour capital into a business, and instead prefer to buy equity from founders. Dragons Den is a good take - large amounts of equity, low valuations, founders selling chunks of their company far more for the expertise and connections and clients of the investor than for the money. I'm not really too sure where this difference in culture arises from - I suppose in some ways business in the UK is far more conservative, less ebullient, and still dominated by an almost Victorian attitude to business relationships and social status. Edit: Worth mentioning, I suppose - run a (not so startup any more, we're nine this year) in the UK, sold a minority stake a few years ago to a well aligned investor-partner who's a few years "up the curve" from us. Happened in the way these things do when they actually happen - we weren't looking, they approached us, we bit their arm off, and haven't looked back.
- elmar 12y ago
  On my view, probably the two main differences. 1- No unicorns "Given the weak public market for young companies in Europe, the primary avenue for their exit is a trade sale (merger or acquisition) rather than an IPO. Moreover, there is compelling evidence that exits via trade sales are, in general, not as lucrative as exits via IPOs. Thus, it has been argued, a key reason why VC firms in Europe underperform their American counterparts is the absence of a stock market that is eager to trade the shares of new companies." 2- No former entrepreneurs VC's "Success breeds success: many American venture capitalists have run start-ups themselves. European ones tend to be bankers and lawyers with little operational experience and less appetite for risk. That is why they have focused on more mature companies rather than on young start-ups… And it is why Europe’s new angels are determined to focus on infant firms."
  - pcrh 12y ago
    >No former entrepreneurs VC's In my experience this is the critical matter. The entrepreneurial business scene in London is dominated by the finance sector, which mostly involves shuttling money through various assets in order to harvest a bit each time it moves. As such, a lot of early stage technology VC is geared towards "tax efficiency" on the behalf of investors rather than potential for big gains from the technology. Note that this is raised as an issue several times in the OP. In contrast, one can easily raise multiple millions in order to attempt some novel wheeze in stock trading or playing some game on the financial markets.
    - elmar 12y ago
      the typical UK/European VC as a financial education background, never started or worked in a Startup, and loves excel sheets with extensive projections and economical ratios.
- genmon 12y ago
  I think the UK is catching up. TechCrunch has some good stats [0] -- from that piece: London startups received $1.35BN in VC in 2014; US-based Internet companies took $11.9BN that same year. A big gap, definitely, but I wouldn't say barren. In my experience, it's true that the UK tended more towards the "buy a stake in the business" mindset rather than the Valley-style "invest in this startup for a future exit" mindset... but that's been changing for a few years, and change is accelerating (more seed-stage funds, more tech-savvy angels). But yeah, the Valley-style mindset isn't evenly distributed yet. [0] http://techcrunch.com/2015/04/02/londons-startups-hit-a-high-of-682m-in-vc-funding-in-q1-2015/ http://techcrunch.com/2015/04/02/londons-startups-hit-a-high...
- pjc50 12y ago
  almost Victorian attitude to business relationships and social status I've heard a couple of rants on this subject from people who were in a position to know. The UK is much more connection-driven than it looks. Much of our past and current industrial problems I would lay firmly at the feet of managers provoking needless conflicts with staff and failing to be open to change. Look at the car industry: the successful firms are either small enough to fit everyone in one shed or foreign multinationals. While the local brands coalesced into MG Rover before finally sinking among allegations of fraud by the directors. This is partly why the UK startup scene is coalescing in London despite the very high costs there; you have to get personally acquainted with the finance people in order to get the money in. (If anyone has comments on the Scottish startup scene I'd be interested to read them)
  - gaius 12y ago
    El Reg had a good article on this recently, people like Martha Lane Fox don't become serial entrepreneurs, as soon as they have one successful company they run off to join quangos where grubby commerce won't disturb their new establishment social position.

by elmar 12y ago

madaxe_again 12y ago

It's a very different kettle of fish. In the UK, investment in tech startups is pretty barren - investment tends to be placed more readily with traditional engineering ventures - weapons, aerospace, material products - but for software... not so much - or at any rate, not in the model of angel rounds, etc. The scene in the UK is rather more "be bought" - people aren't anywhere near as willing to pour capital into a business, and instead prefer to buy equity from founders. Dragons Den is a good take - large amounts of equity, low valuations, founders selling chunks of their company far more for the expertise and connections and clients of the investor than for the money. I'm not really too sure where this difference in culture arises from - I suppose in some ways business in the UK is far more conservative, less ebullient, and still dominated by an almost Victorian attitude to business relationships and social status. Edit: Worth mentioning, I suppose - run a (not so startup any more, we're nine this year) in the UK, sold a minority stake a few years ago to a well aligned investor-partner who's a few years "up the curve" from us. Happened in the way these things do when they actually happen - we weren't looking, they approached us, we bit their arm off, and haven't looked back.

elmar 12y ago
On my view, probably the two main differences. 1- No unicorns "Given the weak public market for young companies in Europe, the primary avenue for their exit is a trade sale (merger or acquisition) rather than an IPO. Moreover, there is compelling evidence that exits via trade sales are, in general, not as lucrative as exits via IPOs. Thus, it has been argued, a key reason why VC firms in Europe underperform their American counterparts is the absence of a stock market that is eager to trade the shares of new companies." 2- No former entrepreneurs VC's "Success breeds success: many American venture capitalists have run start-ups themselves. European ones tend to be bankers and lawyers with little operational experience and less appetite for risk. That is why they have focused on more mature companies rather than on young start-ups… And it is why Europe’s new angels are determined to focus on infant firms."
- pcrh 12y ago
  >No former entrepreneurs VC's In my experience this is the critical matter. The entrepreneurial business scene in London is dominated by the finance sector, which mostly involves shuttling money through various assets in order to harvest a bit each time it moves. As such, a lot of early stage technology VC is geared towards "tax efficiency" on the behalf of investors rather than potential for big gains from the technology. Note that this is raised as an issue several times in the OP. In contrast, one can easily raise multiple millions in order to attempt some novel wheeze in stock trading or playing some game on the financial markets.
  - elmar 12y ago
    the typical UK/European VC as a financial education background, never started or worked in a Startup, and loves excel sheets with extensive projections and economical ratios.
genmon 12y ago
I think the UK is catching up. TechCrunch has some good stats [0] -- from that piece: London startups received $1.35BN in VC in 2014; US-based Internet companies took $11.9BN that same year. A big gap, definitely, but I wouldn't say barren. In my experience, it's true that the UK tended more towards the "buy a stake in the business" mindset rather than the Valley-style "invest in this startup for a future exit" mindset... but that's been changing for a few years, and change is accelerating (more seed-stage funds, more tech-savvy angels). But yeah, the Valley-style mindset isn't evenly distributed yet. [0] http://techcrunch.com/2015/04/02/londons-startups-hit-a-high-of-682m-in-vc-funding-in-q1-2015/ http://techcrunch.com/2015/04/02/londons-startups-hit-a-high...
pjc50 12y ago
almost Victorian attitude to business relationships and social status I've heard a couple of rants on this subject from people who were in a position to know. The UK is much more connection-driven than it looks. Much of our past and current industrial problems I would lay firmly at the feet of managers provoking needless conflicts with staff and failing to be open to change. Look at the car industry: the successful firms are either small enough to fit everyone in one shed or foreign multinationals. While the local brands coalesced into MG Rover before finally sinking among allegations of fraud by the directors. This is partly why the UK startup scene is coalescing in London despite the very high costs there; you have to get personally acquainted with the finance people in order to get the money in. (If anyone has comments on the Scottish startup scene I'd be interested to read them)
- gaius 12y ago
  El Reg had a good article on this recently, people like Martha Lane Fox don't become serial entrepreneurs, as soon as they have one successful company they run off to join quangos where grubby commerce won't disturb their new establishment social position.