The start-up finance arena is so fast-moving it’s difficult to keep tabs on. Good job Elite Business has experts such as Oscar Jazdowski of Silicon Valley Bank to keep us up-to-date
There has been a lot of change in the UK start-up scene in the last 12 months or so. An increasingly fertile ground, it has been attracting talent and entrepreneurs from all over the world to come and try their luck. Similarly, the finance landscape has evolved too, with incubators sprouting up almost daily and the proliferation of crowdfunding companies such as Crowdcube and Funding Circle.
But one bank that has matured and grown with the market is Silicon Valley Bank (SVB). Hannah Prevett spoke to head of origination Oscar Jazdowski about his predictions for the coming years.
Elite Business: What’s new in the world of SVB?
Oscar Jazdowski: This year, SVB has grown up and became a real bank. [It was granted its branch licence by the FSA in April this year.] It has fit in really well with what’s happening with Silicon Roundabout and Tech City, and we’ve received a really warm reception. Overall, I think the technology environment seems to be quite robust.
One of the latest development seems to be the growth of incubators here in the UK. Telefonica, for example, has established incubators around the world and recently announced plans for its Wayra Academy, which will open its doors in London next May. These initiatives that really help tech start-ups get off the ground are what’s really underpinning a lot of the continued activity in the technology sector.
EB: There are undoubtedly comparisons drawn between Silicon Valley and Silicon Roundabout. How do you think we compare in the UK?
OJ: There’s no competition because in many ways you can’t compare Silicon Valley to any other region of the world. There is no other place on this planet that is quite like it.
But the eco-systems that have been created in the UK around Silicon Roundabout and Cambridge, Oxford etc are unique and are evolving and developing in their own way. What’s more, London has its own advantages: today in the technology world, it isn’t necessarily the lack of capital that’s problematic for start-ups, it’s the lack of talent. And I’ve actually spoken to US companies from the Valley who are looking to open up in London because we have the skills, such as HTML5 developers.
In London we also have a very strong media and marketing background, because some of the largest advertising companies in the world are here. We now see a lot of customers from the US and elsewhere looking at London as one of the digital media capitals of the world.
EB: What’s it like for entrepreneurs starting a business in today’s climate?
OJ: There’s not been a better time to start a company than today. That’s driven by a number of factors. Firstly, it’s much cheaper than ever before – you can rent server capacity, there’s cloud storage (which is very cheap and scaleable), open-source software, and you’ve also got platforms like Facebook, which gives you access to millions of potential customers. Never in the history of mankind has that situation existed where you can start a company really cheaply and also be able to access a huge number of customers. That’s why the applications market has become such a phenomenon globally.
On the funding side, the other trend we’ve seen evolve most over the last 12 months is crowdfunding. I think crowdfunding is the new seed, and potentially series-A, finance. We experienced this first in Silicon Valley and we’re seeing a lot of traction here too. There are entrepreneurs in the Valley who went out to raise $750,000 and they ended up raising $1.5m in six weeks.
EB: What are the hot areas of innovation at the moment?
OJ: Our model hasn’t really changed. We’ll work with entrepreneurs who have raised money from institutional VC firms.
As for the sectors that are important right now, we are living today in a mobile revolution – we’ll look back at these days and say this was the period when everything went mobile. Everything mobile continues to be very hot, including anything relating to location services, mobile advertising and so on.
Also, we’re also living in the age of big data. Companies have so much data they need to slice and dice and analyse in real- time. And the third area of interest is cloud. Everything is moving to the cloud, thus enabling entrepreneurs to redefine how they build their businesses.
EB: SVB recently pledged to lend $100m to Irish companies in the next five years. Why the interest in the Emerald Isle?
OJ: We look at Ireland as having a very positive future in technology. Google has got 2,500 people in Dublin, Zynger is there and PayPal has just opened a centre of technology. There are a lot of big tech companies in Ireland today, originally driven a little bit by tax incentive, but also the talent – there are well-educated, English-speaking, smart people there. And what’s starting to happen, just like in Silicon Valley and in London, is that individuals leave and say: “I’m going to start up my own company.” We’re already starting to see new start-up activity spawning in Dublin. The future is bright.