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London calling: the foreign startups flocking to Tech City

Written by Josh Russell on Tuesday, 03 June 2014. Posted in Technology

There’s currently no shortage of international entrepreneurs bringing their startups to Silicon Roundabout. We look at why tech companies from around the globe are flocking to Tech City

London calling: the foreign startups flocking to Tech City

If you’ve spent much time kicking around Shoreditch, you’ll know if there’s one thing east London loves more than hipsters it’s tech start-ups. Not only is Silicon Roundabout the residence of homegrown heroes like MOO and Mind Candy but it has drawn in many an international behemoth, including Google, Facebook and Amazon. Given its increasing desirability as a location for foreign start-ups to launch, we ask three start-ups why Tech City is the place to be.

The start-up

Klappo

Massimiliano Del Vita, co-founder & CEO of Klappo, the data platform for food ingredients, certainly isn’t lacking in globetrotter credentials. The entrepreneur has spent the last 15 years working in various countries across the globe, from his home country of Italy, through Sweden and a four-year stint in China, to his current home in the UK. So when he came to launch Klappo, he had plenty of places to choose from.

Del Vita felt his homeland wouldn’t have been the right place to launch an ambitious tech start-up. “I come from a place that I love: Italy is a great country,” he says. But he believes that the country has several key issues that make it a tougher environment in which to grow a business than nations like the UK. “The bureaucracy in Italy does not help young entrepreneurs to succeed,” he explains. “There are also a lot of issues around ability to access funds and money.”

For a fledgling tech firm with its eyes on the global market, it felt like a no-brainer to start up in London. “We wanted to have a more international reach,” Del Vita explains. Given all of the international businesses operating out of the city, this made London an excellent choice and when the young start-up began to look where in the city would best suit its needs it seemed like it was a bit of a no-brainer. “We wanted to be able to share, to collaborate and access other people, experience and opportunities,” he says. “Our first choice was Silicon Roundabout.”

And it definitely seems to have been the right choice for the enterprise. “So far it’s been really amazing, both because of the accessibility to money and funds but also the laws and regulations that help and sustain young entrepreneurs,” says Del Vita.

Not only has working in Tech City placed Klappo right in the backyard of some very large businesses but it is having such a vibrant start-up ecosystem on its doorstep that has proven so valuable. 

“We’ve also been participating in a lot of these meetups and events where you can network with people,” Del Vita comments. Several of these connections have led to long-term collaborations with people, resulting in Klappo and other enterprises either swapping work quid pro quo or hiring each other’s talent for specific tasks. He explains: “It’s actually very effective.”

But Del Vita doesn’t believe his business would be the only one to benefit from what Silicon Roundabout can offer. There is a huge curiousity amongst his fellow entrepreneurs on the continent about the potential Tech City has for start-ups. “Every time I go back to Italy I tell my friends,” he says. “I’m actively an evangelist of London and the tech scene here.”


The mover

Freespee

Freespee, the ad tech company, began its journey in co-founder and CEO Carl Holmquist’s home country of Sweden. During his work in telecoms software, a client he was meeting complained about the fact that, while they could track their customers’ purchasing journeys online, the second they decided to complete their purchase over the phone the tracking pathway effectively ended. Holmquist immediately rang up his future co-founder. “I asked ‘can’t we solve this problem?’ and he said ‘yes we can’,” he recalls. “That is the day we started.”

But before long it became clear it needed to extend its reach. “Our main customer audience is online marketers and London is basically the marketing hub of Europe,” Holmquist explains. Inevitably this meant that once the start-up was up and running, some presence in the city would have been fundamental. But Freespee wasn’t content with just having a sales office abroad. Holmquist continues: “Instead we chose to make it a bigger move and establish London as our global headquarters.”

This decision wasn’t just about being on the doorsteps of their customers. “In east London we would get access to world-class talent,” says Holmquist. Whilst Sweden hardly has a paucity of talent, exec-level hires with a knowledge of building a global growth strategy aren’t necessarily ten-a-penny. He elaborates: “It has been really valuable to us to come here and get connected to that talent source.”

Being based in Tech City has had huge ramifications for Freespee. “One of the main positive effects is the attitude of the sharing generation,” comments Holmquist. Working in one of the area’s co-working spaces allowed the company to not only share knowledge and talent with other start-ups but also gain access to valuable contacts. “Many of our first customers in the UK come from the co-working space or people our neighbours knew that needed our service.”

However, he does feel that enterprises need to be established and have some backing before they relocate. “You can’t bootstrap as a foreigner in London,” Holmquist says. Things like drafting UK option schemes and the high costs of recruiting locally can’t be easily afforded on a shoestring and this means an ambitious foreign business risks hampering its growth if it makes the jump too soon. “As long as you’re well-funded, London can be a great city,” he says. “And once you’re here, you’re able to grow faster than you could do in most other markets in Europe.”

 

The second home

Knewton

Unlike our two other enterprises, Knewton, the adaptive learning start-up, wasn’t looking for a new home. Founded in New York in 2008, the company already had healthy revenue and strong roots in the States but after six years of operating, it realised that it was time to capitalise on the rapid growth it was seeing in European markets. David Liu, the firm’s chief operating officer, explains: “Having raised $51m at the end of last year, we decided that now was the time to develop a stronger presence here to support our partners in Europe and beyond.”

Despite its comfortable position, finding the right fit for its second location was absolutely vital. “Since Knewton was founded, we’ve worked hard to foster a culture of creativity and innovation, maintaining our start-up mentality despite the company’s high growth,” comments Liu. “It was important for us to maintain that same Knewton culture wherever we set up our first international office, and Tech City is the perfect fit.”

Trying to launch a new office was something of a daunting prospect, particularly because the initial team was comprised solely of relocated Knewton staff. Getting to grips with an unfamiliar city is never easy at the best of times, let alone when one is making decisions involving significant financial investment. Fortunately, the enterprise had a little help from a friend: Tech City UK, the organisation championing the area and supporting its start-ups.

“Tech City UK was a vital resource in easing the transfer,” Liu explains. “Their team provided us with a great deal of advice and guidance when it came to setting up our second office, including helping us find our office space in a great location surrounded by fantastic restaurants and coffee shops.”

In part because of this help, Knewton’s expansion has surpassed its expectations. Liu comments: “We’ve only been in London for a few months now, but we’re already finding Tech City to be a great location for establishing a presence in Europe and helping to grow our international business.”

Not only has the location given Knewton access to the highest quality of talent but it has placed the company at the heart of a community of edtech start-ups. “It’s been really exciting and inspiring for the team to be surrounded by other companies that are also trying to make the world a better place,” Liu says.

There are no doubts in Liu’s mind that east London was the right choice to establish a second international location. “Tech City is a great place to set up shop,” he says. “We’ve found it to be a supportive and inspiring community and we’re really happy to be a part of the burgeoning London tech scene.” 

About the Author

Josh Russell

Josh Russell

When he isn’t tooling around on trains in a tux like the Daniel Craig of the Greater Anglia transport system, Russell spends his time living the glamourous life of an enterprise journalist, judging Digital Business of the Year at the National Business Awards and attending conferences like NixonMcInnes’ Meaning 2013. However, like all good secret agents, Russell lives a double life – in his case, as a closet revolutionary. Social enterprise, sustainable business and collaborative practices are his true passions, something that he has had plenty of opportunity to air in his features here at Elite Business.

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