UK Startups Look For Funding And Escape From Echo Chamber
I've been meeting a lot of UK entrepreneurs as part of the Traveling Geeks trip and I'm hearing a lot of the same things US startups tell me. They are looking for funding and also fed up with seeing the same people at their meetups.
Funding is a big problem in the UK because there are very few European VC funds actively investing. And very few angels. Many startups are looking to the US for funding but they tell me that most US VC firms have closed their UK offices.
One entrepreneur told me: "We're thinking of relocating some of our team to San Francisco so that we can be closer to the VC firms. Several VC firms have told us that they love our product but we are not over there. And so they wouldn't consider investing."
That was a common theme: that US VCs won't invest in startups unless they are in Silicon Valley.
I didn't have the heart to tell people that even if you are in Silicon Valley funding is really tough right now.
I ran into Don Thorson from Silicon Valley based Ribbit yesterday. Ribbit had a very nice exit about a year ago when BT bought the company for $105 million.
Mr Thornson was in town for a board meeting at BT. We began talking about startup funding and he was complaining that the Silicon Valley VCs aren't doing any investing. He says there are some very good startups around but many have just a few months of runway left.
This is a serious situation. If we can't have sustained funding we won't have a crop of next generation companies to harvest when exits open up.
It's one thing to have no exits but it's another to have no companies to exit. That means no new money to reinvest in Silicon Valley.
The UK entrepreneurs regularly get together at various events but many are getting fed up seeing the same faces and hearing the same stories. I can relate.
- One entrepreneur told me: "I've started going to fewer events because I wasn't getting much value from them. And everyone's business ideas started sounding very similar. I'd rather spend some time developing some original ideas."
The UK entrepreneurs are heavily into social media and Twitter. Some hope to be acquired by larger startups that have the potential to go public once financial markets open up. But when that happens is anyones guess because the UK economy continues to splutter.
Right now, it seems that a few seed investments would go far in the UK. A few angel investors could make some smart bets at good valuations.
I'll mention some of the startups I've been meeting in a later post.