The capital is fast becoming the No 1 choice of overseas entrepreneurs, reports Laura Chesters
By Laura Chesters Sunday 05 August 2012
Olympic fever has taken hold of the UK, and while the world’s eyes are on the capital the Government is touting the city to business via the Global Investment Summit.
But while the summit has focused on attracting global conglomerates, London has become the go-to place for overseas entrepreneurs to launch their first business. The US has Silicon Valley, Israel has Tel Aviv and Berlin a burgeoning scene of young firms, and London has clusters of new businesses run by overseas entrepreneurs.
Stefan Glaenzer, a German digital entrepreneur and investor has founded and backed a clutch of businesses in the UK including Last.fm and Mendeley, and runs a hub playing landlord and investor to a group of start-ups at White Bear Yard in Clerkenwell.
Glaenzer, who arrived from Hamburg in 2000, says: “London has the best ecosystem in Europe for digital companies. People in London think globally. In France, a French company will think about expanding in France, in Germany they do the same. Whereas in England we think globally from day one. You can find talent from all nationalities in London.”
The Government-backed Tech City Investment Organisation, which promotes start-up tech companies in east London and further afield, is doing its bit to lure business and hopes “clustering” – housing groups of like-minded entrepreneurs together – will boost growth. Just last week it revealed Vodafone and Barclays have invested in the area. Similar groups are forming all over the city, with Telefonica setting up its ninth Wayra Academy in Bloomsbury, to help tech start-ups.
When the athletes move on, these tiny businesses will still be in training in the hope of being the next Google or Facebook.
Juha Koski, Finn in Victoria
Madbid.com, the pay-to-bid auction site where bidders can win an iPod for 6p or a laptop for under £30, could have been set up in Finland, Germany or even Spain but its founders, former bankers, chose London.
Managing director, Koski, explains: “I have worked and studied in Finland, Spain and Germany but here in the UK you can start a company very cheaply and quickly. Germany’s red tape makes it very complicated and you would need a team of tax lawyers just to start.
He adds: “There is no other market like the UK. The broadband infrastructure is brutally important and your government is behind this.”
Madbid, which raised £4m from Atomico Ventures, an investment group started by Skype co-founders, plans to look at extra funding partners in future.
Jan Reichelt, German in Clerkenwell
Skype helped three friends start their business while still in different countries – all their meetings took place over the internet. “We were in the UK, India and Germany. At the beginning, in 2008, there were just us three raising seed money,” says Reichelt.
The business, which creates programs to share university research papers, now employs 36 people. As well as its Clerkenwell base it has an office in New York.
Reichelt says: “London is great as there is the possibility of access to networking and capital and the academic space is very developed.
“Berlin is starting to thrive now but that wasn’t the case back in 2008.”
Jason Trost, American in Clerkenwell
Hailing from Dallas and Conneticut, the founders of sports betting exchange Smarkets hopped over the pond to create their small business. Online betting is illegal in the States so coming to Europe was one of a few obvious options.
Says Trost: “We could have run the business from the US, doing it all online but it made sense to move to the market we would be trading in. The online betting sector in the UK is a growth market.”
But it wasn’t just the UK’s market growth that swayed the pair. “There are many reasons to come to the UK – health insurance is cheaper, set up costs are cheaper, tax is more straightforward.
“We started from my flat in Kentish Town, north London, in August 2007, having first met at university in 2002. Stefan Glaenzer invested in 2009 and we moved to White Bear Yard in October 2009.”
Gareth Knight, South African in Kennington
Technovated and Kindo
Knight already has one internet company under his belt. Originally a zoology graduate, he came to the UK in 2002 and founded the family social network Kindo, before selling it to genealogy website MyHeritage in 2008. He is now working on his next ventures: Technovated, which rolls out online stores and has just launched ecommerce site Wedo. “There is definitely more money available in the US,” he says. “But, it is easier to set up here from overseas – it is more welcoming.”
However, life in London isn’t all rosy: “Banks here make it so difficult for a start-up company. They seem to only want to deal with established companies.”
Ning Li, Chinese in Notting Hill
Former banker Ning Li came to London via France, to set up made.com. a company that aims to cut out the middleman in the furniture business. He has backing from lastminute.com founder Brent Hoberman’s PROfounders Capital and employs more than 80 people around the world with 58 in London.
He grew up in China but as a teenager he moved to France to study, setting up his first furniture business in Paris which he sold to the French group Conforama.
“In Paris, I felt lonely as an entrepreneur. The risks of setting up on your own are viewed as too great by many,” he says. But in London he found his niche. “Everyone talks about starting a business. It’s a really dynamic place.”