Commentary

London's Start-up Scene Is Thriving

Phil Cooper is not happy. The digital advertising veteran who has sold two businesses and recently ran Brightroll in the UK is responding to the comments from late last year by AirBnB Silicon Valley co-founder Nathan Blecharczyk, who claimed that London is “stuck in a Silicon Valley roundabout”. Blecharczyk said the capital still lacked a "home run", citing Twitter’s recent IPO as an example of the kind of success London needs. “The Twitter IPO represents that; it will inspire people to reach that goal.”

Despite the fact it’s now three months on, Cooper, founder of Kippsy.com, a collaborative accommodation site, is obviously still riled, “London has a different vibe, and has always moved to its own beat. We may not have the investment infrastructure within the ‘valley’ in the same way — but a truly good business model will always surface driven by consumer demand.” 

I have to say I agree with much of what Cooper is telling me. I, too, get irritated when Silicon Valley heavyweights launch into the UK start-up market, thinking that we are a small-tech inferior backwater. Vodafone only just sold Verizon for US$130 Bn, being one of the largest sales in history, and Tim Berners Lee was a Brit who invented the internet! 

Maybe we just do things differently here. As Cooper added, “Our London start-up is a classic David-and-Goliath scenario. I’m very respectful of all of our competitors, new and established. But, we are still managing to innovate in the space, in both technology and business process. In London, we value personal service. We aren’t trying to be another Silicon Valley.”

 And maybe we should even try to be so. "London is on top of its game," says Joanna Shields, CEO of the government's Tech City initiative. "It has New York's urban diversity, LA's concentration of media, film, TV and creative industries and Washington, D.C.'s proximity of government, all in one place."

The three-year-old state project has been responsible for tax breaks for investors, the introduction of visas for entrepreneurs and the addition of a new division on the London stock exchange, the High Growth Segment. A number of high-growth companies were snapped up in the first half of 2013, including Summly (built by the achingly young Nick Aloisio) and Mendeley, acquired by Yahoo! and Reed Elsevier.

London has also successfully incubated start-ups companies like Hailo, the international taxi app used by 13,000 of London’s 24,000 black cabs; and Moshi Monsters, with over 80 million registered users in 150 territories worldwide, has become a global phenomenon. And this is all just the tip of the iceberg. Last year, 15,720 new companies launched in Tech City and Government figures showed that the digital and creative industries in the UK, accounted for 6% of GDP.

One of the growing segments of the digital industry to emerge in 2013 and one I’m tipping to become much bigger in 2014, is the peer-to-peer economy, largely driven by advances in technology, but social trends and the economy have made a contribution. Consumer-to-consumer businesses have been around for years, but e-commerce and online payments have become more efficient and trusted, bringing the sharing economy to the mainstream, and the benefits are widely acknowledged on social media

Kippsy.com, a start-up less than six months old, is one such facilitator which aims to disrupt, and innovate in, the marketplace. Cooper launched Kippsy with an “eye on offering a personal service that worked both for consumers and the landlords”, something I’ve come to find lacking with AirBnB.

This new style of business interests me greatly as they are in a sense a product of the global recession. It seems to be booming in areas such as accommodation and car-sharing. Connecting users of under-used assets with a consumer base with a variety of reasons for wanting to share, particularly in the accommodation market: including environmental issues, budgets, experiences, exploring new areas, meeting new people. 

As the economy starts to regain confidence, it is giving this community a renewed sense of ownership and entrepreneurship. The European Commission’s detailed report on the sharing economy had a projection from MIT Sloan Experts blog that the “collaborative consumption” sector had the potential to become a €81.5 billion market globally. Whether London is at the heart of that sector remains to be seen but what you can be sure of is that the start-up scene here will continue to thrive as long as the likes of Phil Cooper are around.

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