Six out of the eleven startups that were recently accepted into TechStar’s first international program in London have a financial angle, Jon Bradford, Managing Director of TechStars London, tells me over a pub lunch in the London neighborhood of Clerkenwell, down the road from TechStar’s new office space. Beyond the financial slant — which is a unique focus for London’s emerging tech startup scene — there’s a variety of other little differences between the inaugural London class, and the ones that have gone through TechStar’s 3-month mentorship and equity-investment program over the past seven years in cities across the U.S. including Boulder, Austin, Boston, Chicago, New York and Seattle.
But London is the brand name accelerator empire’s first global initiative, and it’s one that the group is “all in on,” says David Cohen, TechStar’s CEO and founder, who this week visited the couple-week-old office space in Clerkenwell. Cohen and Bradford met years ago and decided to partner on TechStars London — Bradford’s accelerator SpringBoard merged with TechStars London, and Bradford is a long time founder and leader of U.K. accelerators.
The TechStars London execs are keeping many of the details of their inaugural London class under wraps until the end of September when they’ll hold their first demo day, where the companies will show off their products. But the eleven companies were announced at the beginning of July and include some novel ideas like Osper’s venture to create banking for kids and Peerby’s peer-to-peer borrowing platform. The entrepreneurs not surprisingly are pan-European, spanning from Holland, Ireland, Spain, the U.K., Slovenia and Serbia.
But the London program mostly works the way TechStar’s other ones have: the team digs through hundreds of startup applications, selects the 10 (or usually 11) that they’re the most excited about, and offers them €15,000 in seed funding and €70,000 in an optional convertible note. The seed funding gets TechStars 6 percent equity.
For the London class, Bradford tells me that there were 1,300 applicants for the 11 slots. Unique for the London program, the U.K. government is also offering entrepreneurs that make it into the TechStars program, a 3-year visa to work on the company in the U.K., and if the company grows and has 10 full time jobs, the entrepreneur could eventually get citizenship. Cohen tells me that the nimbleness and flexibility of the U.K. government has surprised him, as often times government works better when it’s kept out of the way.
The funding environment for tech startups in London is also a little different from the one that dominates the mature market of Silicon Valley. Venture capitalists tend to be more spreadsheet-driven, more conservative, potentially more risk averse — often times they’re asking to see series C-style financials from a series A company, explains Cohen. Bradford describes it as “the point at which they’re [VCs] willing to jump in is later.”
I’ve heard the same thing from entrepreneurs in London who are looking for investment for early stage companies. “Venture capitalists almost need to see a no-risk guarantee,” one entrepreneur told me.
That’s starting to change, however, as London is increasingly starting to be known as a tech startup hub and international venture capital firms are all paying attention to it now. On a panel I moderated last week at the Guardian Activate conference, Saul Klein of Index Ventures, Bindi Karia, Vice President, accelerator, at Silicon Valley Bank and Julie Meyer, founder of Ariadne Capital, all championed London’s quiet ability to build some of Europe’s biggest and most successful tech firms. It’s not about a lack of success, it’s about drawing less attention and having less attitude, the group agreed.
TechStars is used to aiming outside of the limelight, and outside of the Valley. It was born out of Boulder and it moved into New York before Silicon Alley exploded. Cohen tells me London feels a little bit like New York or Boston were a few years ago or “still in transition.”
But it’s that transitional point where tech investors can usually get in early enough to find the best companies to choose from. The TechStars team also sees London as a gateway to the rest of Europe. Its London class is filled with European entrepreneurs that see London as a European hub.
GigaOM thinks London is a vibrant enough tech hub that we’re holding our annual Structure:Europe conference in London, and we’re looking for startups to apply for our Startup Zone. We’re accepting applications until the end of this week.