Yesterday kicked off the swing through the United Kingdom for Governor Patrick of Massachusetts and the Innovation Economy Partnership Mission 2011. After a remarkable week in Israel I found myself in London – but only for the first day of the Mission. Admittedly Sunday night I watched the U.K. vs Scotland rugby match in an authentic English pub – didn’t really care for the beer though.
Much of the day was spent at the TechHub in East London where I met a number of local start-up’s and angel investors. TechHub is sponsored by Pearson, Google and Telefonica (much like CriticalMass in Cambridge, MA – not UK) and is considered the first true collaboration work space in London open just to entrepreneurs. While it was hard not to be constantly comparing this community with what I had seen in Tel Aviv and Jerusalem last week, I will offer up a couple of observations:
- East London is akin to Palo Alto or Kendall Square while Mayfair is comparable to Sand Hill Road or Waltham (or 500 Boylston Street in the Back Bay, where Flybridge is located!)
- The East London neighborhood – affectionately called “Silicon Roundabout” – is the tech cluster where it is estimated that there are 100 start-up’s
- Incubator space is a very big deal in London given the cost of property which is why there aren’t any/many
- Mike Butcher who runs TechCrunch in Europe described London for me as the “saloon bar” of Europe where people come in off the prairies of Germany/France/Sweden, etc
- Years ago the government initiated the Tech City Investment Organization which today is felt to have had a hand in the creation of 150 companies which raised 250 million pounds – impressive
- The local VC scene was characterized as “emerging” – only 400 million pounds was invested last year; some of the angels thought there were only 20-30 new “Series A” companies formed in 2010 by VC’s – I made a note to check that as it sounded like a really small number
- Less than 10 millionaires were created by Skype – further underscoring the lack of emphasis on equity compensation in the market
“Where is everybody?” was a common lament heard throughout the session. In addition to the lack of true entrepreneurial density in the market, the entrepreneurs were concerned by the ethos and cultural issues conspiring against them. One impression I had was that the English VC’s took a more measured, tempered approach to the business of early stage investing – can not point to any data but rather just the sense I left with. Not necessarily bad, but certainly different than what I witnessed last week in Israel.
Additionally I spent some time at the London Stock Exchange (looks eerily like the NASDAQ in NYC) as well as Lloyd’s of London where I met the CEO and toured the trading floor (which reminded me of the bond desks at Solomon Brothers in the 1980’s – again in NYC). The CEO claimed that Lloyd’s insured the tea thrown into the Boston Harbor a few hundred years ago!
At Lloyd’s I asked about the insurance industry’s exposure to the catastrophe off the coast of Japan. The Japanese tend to be more self-insured and government insured so the commercial exposure he likened to a Category 4 hurricane hitting the Florida coast – but under his breath he mumbled the economic losses will well exceed $100 billion dollars. Staggering. And this on the heels of the disasters in Australia, New Zealand, Chile in recent months…
So concludes the trip.