UCL BASE co-working and event space was chosen as the venue for the Capital Accelerator Programme’s look at London’s future technology trends and also provided a timely opportunity to celebrate the conclusion of their 18 month program, financed by the European Regional Development Fund (ERDF) and the Mayor of London’s office.
CAP’s aim was to provide expertise, mentoring and guidance to start-ups plus a network of supporting services and resources including incubators and accelerators such as Entrepreneur First, Startupbootcamp and Seedcamp, co-working spaces including Bathtub2Boardroom and ImpactHub Westminster, and data providers and information agencies like F6S and City University London.
The project, which concluded in July also helped to provide introductions to early stage investors via CapitalList, the fundraising consultancy which helps start-up businesses looking to raise £250k-1m find funding via The London Capital Investment Fund’s accredited partners, which include most of London’s top early stage investors and VCs, e.g. Playfair Capital, Forward Partners, Downing Ventures, Crowdcube, AngelLab, London Business Angels, Firestartr & Craigie Capital.
Attendees included many of the successful applicants to Capital List and the London Co-investment funds Green Light Programme (GLP) which attempts to help early stage start-ups get noticed and receive the support they need to stand out in an increasingly crowded marketplace.
The GLP has reviewed more than 600 applications since launch in December 2014, giving the “green light” to 100 businesses. Services include “Meet the investor” sessions, mail-outs to a network of carefully chosen partners, circulation of pitch decks, invitations to demo days and speed networking sessions. Capital List and the LCIF will launch a 3rd GLP cohort in September; start-ups are encouraged to apply here.
CAP, working in tandem with University College London, City University and Imperial College was able to find £1.9m of extra funding this year; Thursday’s event was sponsored by business and accounting software start-up Geniac, who have successfully raised £22m of investment funding, buyapowa, one of Europe’s hottest ecommerce and “gamification” start-ups, and cloud services provider Rackspace. Panel debates and discussion forums took place simultaneously, with discussions relating to FinTech, AI, VR, sales and marketing and the future of tech in London throwing up all kinds of points for discussion and debate. Here’s a brief synopsis covering some of the sessions. The day was rounded off with cocktails and networking from 5pm to 8pm.
FinTech – what’s next for London’s no. 1 technology sector?
Craigie Capital’s Alasdair McPherson, Brad Novak, CTO at Barclay’s Investment Bank and Raja Palaniappan, CEO of Origin Markets were amongst the panel members discussing London’s pre-eminence in the FinTech industry; London’s FinTech practicioners should be giving each other a “group hug”, it was decided, but also asking itself if the city can sustain the pace of growth over the coming years. It was felt that in order to stay ahead London should be thinking about moving away from B2C and looking more at the less glamorous but potentially more lucrative B2B market.
Looking beyond money transfer, payments services and the often controversial “blockchain”, the panel felt that the provision of services to the middle offices of investment banks, such as regulatory and compliance departments is an area that offered plenty of opportunities for hungry start-up founders. Raja Palaniappan, who quit his front office role as a corporate bond trader to launch his trading start-up suggested that he knew it was time to move on when he realised that the smartphone in his pocket had infinitely more capabilities than the trading screen he was using to complete billion dollar bond trades.
Besides banking, look out for Insure-Tech and tech-enabled Asset management services, but beware of large Corporates putting their logos on a start-up project as it can be hard to distinguish which believe in the projects they back, and which simply do so to be seen to be compliant with their Corporate Social responsibility (CSR) programmes.
The panel were quick to point out also that there are no guarantees of success, that when it comes to accelerators “there will always be winners and losers” and that passion and a bright idea are often as important as technical expertise. Don’t be put off, in other words, if you have identified an inefficiency, for example, but lack the know-how to solve it. There will always be experts willing to join a progressive team.
Finally, as far as the “blockchain” is concerned, don’t hold your breath, the panel warned; the phenomenon is something of a bubble that “will iterate until it finally finds a use-case. In terms of ledger sharing, the real value-add of blockchain, there are plenty of alternative versions that are perceived by banks and financial institutions to be less risky.
To summarise, FinTech will continue to grow and build out a range of different services, but expect evolution, not revolution. And expect to have to fight hard to be successful; there are no freebies being handed out, despite the sector’s success.
Science Tech – How can we best leverage science to create “deep tech” start-ups?
A second panel discussion with representatives from life-sciences investor Spark Impact, machine learning platform Biobeats, City University and Knowledge Transfer Network – Innovate UK, which has helped thousands of science related start-ups gain funding.
Launching a deep tech start-up is a “difficult, long and capital intensive” process, suggested the panel, and London has been guilty of failing to provide the kind of support that the likes of Silicon Valley, in particular, consider the bare minimum; funding, support, and no expectation of profit in the short term. As a result London is “haemorrhaging” Intellectual Property and there is a worrying brain drain.
The founder of Deep Mind, Demis Hassabis, was singled out for particular praise for his insistence that the Company, recently acquired by Google, remained headquartered in London, but not every founder has the same luxury. On the flipside, “we should be fantastically optimistic” about the investment and mentoring eco-system in London, and the quality of the graduates that universities such as Imperial College are churning out.
Although, for a science tech start-up, the UK has “too little capital chasing too many ideas” and obtaining funding “is much harder than 10 or 15 years ago” corporates are reaching out to start-ups constantly in areas such as AI and Health-tech, and, the panel insisted, government funding is available in significant proportions to back great ideas.
To raise funding successful founders must be prepared to be “highly social” at first and less so as they move up the chain and begin pushing the boundaries of what science-tech can achieve, but in the initial stages of growth popularity and passion are viewed as key qualities. Companies like Deep Mind, and Music Metrics, have shown what it is possible to achieve. The support network is there and acutely aware of their responsibilities, so look to London before you look overseas! The short-termism of investors remains a significant threat to the development of truly innovative and influential companies.
Tackling the Funding Gap Panel Discussion featuring investment partners of London Co-investment Fund
A chance for founders to meet and familiarise themselves with London Co-investment Fund’s partners. LCIF have pledged to match its partners investment into start-ups at a ratio of 2.9 to 1; the onus is on the investors to take the lion’s share of the risk, but there’s no doubt the extra funding from LCIF is invaluable, as is the support network.
As Forward Partner’s investor Nic Brisbourne, who recently returned from meeting numerous investors in San Francisco pointed out, the forecast in investment terms for the next year is gloomy, therefore the best time to raise – is now!
London and the United Kingdom have the most encouraging tax breaks for Angel, first time investors and High Net Worth individuals of anywhere in the world, and that is why it is attracting some of the world’s top talent. LCIF have played an important role in solving the funding gap crisis for start-ups looking to raise between £250k-£1m and will continue to do so, tapping into a growing talent pool and providing, in tandem with its partners, a strong, supportive but exacting support network for founders to help grow the great tech companies for the future.
For founders new to the City or to the start-up community, from the outside it can seem fragmented with a “who you know” rather than a “what you know” culture; that can be hard to understand but there are good and bad aspects to the way the eco-system works, and the exponential growth in the sector means that now, more than ever, the strentgth of the support network is key.
CAP, LCIT and the GLP are interrelated services that intermingle seamlessly with independent investors and VCs. Long may it continue; the more attention the sector enjoys, the quicker and more dynamic the growth will be. And the bigger the companies and their valuations will get, albeit tempered with a dose of reality. London is no Silicon Valley, for better or worse. But there are enough voices and talent to ensure that far from being left behind, its model can grow and develop and shine on the world stage.