Web Startups: The London Scene

Across the pond, young entrepreneurs at startups such as Songkick mix British propriety and Silicon Valley style—and smart VCs spot opportunity

by Sarah Lacy

Baby-faced British entrepreneur Ian Hogarth stands in a semi-cluttered loftlike space describing the up-and-coming East London warehouse district that's home to his new startup, Songkick. "Across the street is the pub where Jack the Ripper used to stalk his victims," Hogarth says with a shy smile.

Blimey! This Valley Girl is a long way from home.

But for all the outward Britishness of Songkick's digs, when Hogarth jumps up to draw on a whiteboard, accent or no, I feel like I could be smack-dab in South of Market. The company betrays the unmistakable hallmarks of a San Francisco Web startup: the wide-open flat with mismatched furniture; the jeans-wearing founders living on paltry wages; and of course the grand vision of how a single company is going to revolutionize its area of specialization—in Songkick's case, the world of live music.

The company provides comprehensive concert information, from dates to venues to recommendations. Hogarth and co-founders Pete Smith and Michelle You say about 71% of the U.S. population didn't attend a single concert last year—partly because it's not as easy as other diversions, such as going to a movie. That's what Songkick boldly wants to change.

Songkick's founders are emblematic of a new breed of London Web entrepreneur that mixes British restraint, modesty, and rule-following with the irreverence and boldness so evident in the Web hipsters that dominate Silicon Valley. I spent three days getting to know dozens of London-based entrepreneurs and investors. While Songkick, with its roots in the storied Net incubator Y Combinator, stands out as the most Valley-like, it's clear Silicon Valley's unique style is making inroads with many startups in Britain.

Smart Bets

London has never been considered a center of entrepreneurship. As TechCrunch UK editor Mike Butcher notes, Europeans are encumbered with the well-worn caricature that they're too lazy and well-fed by the state to exhibit entrepreneurial hunger. More to the point, he says, many are just seduced by the more lucrative and certain path of investment banking. The play-it-safe ethos has long permeated the London scene.

Of course, the dot-com excitement of the late 1990s reached across the Atlantic. But London seemed to catch on late and produced very few home run exits in the form of IPOs or sales. Conservative local investors quickly turned on budding entrepreneurs, and computer science and engineering students at Cambridge retreated to the safety of banks, law firms, and consulting companies. U.S.-based venture funding receded and investments in Europe plummeted.

Not everyone gave up on Europe. Angel investors are still rare in London, but a few venture capital firms have placed some smart bets. Among these are Accel Ventures, Index Ventures, and Benchmark Capital, which has a London investment arm called Balderton Capital.

Index Ventures is the emerging powerhouse that backed Skype, MySQL (BusinessWeek.com, 1/17/08), and Last.fm (BusinessWeek.com, 6/25/07), all of which went on to big sales. Index has also invested in Songkick. For its part, Balderton backed Bebo, recently snapped up (BusinessWeek.com, 3/13/08) by Time Warner's (TWX) AOL for $850 million. Indeed, London companies have been in the middle of some of the biggest Web 2.0 exits.