Recently, I went to see Devin Hunt give an overview of London's Startup scene at the Escape School, and why you should base your startup in the city. Devin has a wealth of experience - ranging from obtaining investment from the revered Y Combinator to being a partner at Founder Centric through to developing London based fashion startup Lyst.
The inner workings of London's startup scene can be broken down into;
Most people think of funding as going directly to venture capital funds, obtaining a large investment and becoming a runaway success. In reality, there are a number of funding options;
- Bootstrapping or 'going it alone' with no external funding and instead supported either through the business model or your own money
- Family & Friends on the whole tend to be group of people who believe in you and can often be willing to grant you small loans in order to grow your business.
- Accelerators are able to grant investment (typically £15k for 6%) but will also welcome you into a 3 month programme designed to get you ready for a 'Demo Day' where you can pitch your business to other investors. There are also vertical accelerators, such as Kitchenette, that will invest in specific types of startup ranging from food to social enterprise.
- Angel Investors may invest in your business in return for equity or convertible debt. A characteristic investment for angel investors would be in the region of £250,000 for 25%. Angel.co is a valuable resource as a social networking tool connecting startups to angel investors.
- Venture Capital (VCs) are the most well-known form of funding for startups. VC funding is typically done through a number of stages (Series A, B etc.) where the VCs will invest money into startups for an equity stake in the business, typically taking a 25% stake for a £1 million investment during Series A
- Crowdfunding has become a phenomenon around the world with the success of platforms like Kickstarter and it is possible to use these platforms to crowd source funds for your business.
- Grants and Loans can also be a useful source of funding in the UK with many options including low interest Startup Loans and grants aimed at fostering development in specific areas
It's worth noting that there is no 'mandatory' route through funding; investigating all the options available and finding the right method for your business is key.
London has experienced a large growth in co-working spaces with over 70 now in the capital. This can be beneficial in order to give a sense of professionalism to your business with meeting spaces to woo potential customers or investors, and can also provide you with a great network of other entrepreneurs all in a similar position where you can all mutually learn from each other. This kind of experience can often be invaluable.
Some notable co-working spaces include; Google Campus, Rainmaking Loft and Warner Yard. Check out GoCoWo for a directory of London's co-working spaces.
Events & Communities
London is home to a large number of startups, employing a sizable quantity of people who work in the 60m2 area of the capital. The ability to interact with such a large number of people gives rise to some fantastic opportunities. Events can range either from the very specific to more general events with something for everyone.
There are so many different meet-ups and events – here are a few good places to start:
- Hacker News (HN) London
- 3beards (events and hackathons)
- Google Campus and of course
- Escape The City
Keep in mind that there are many people with technology-enabled startup ideas but they may worry that they won't be able to act on it as they don't have a technical background - this is not a setback! Find events that match your interests in order to meet and find people with the skills to help you grow your business.
To foster entrepreneurship a number of resources have become available over the past few years such hack spaces (Hackney Hacker Space), educational tools and resources (British Library, The Escape School) and recruitment tools (Silicon Milkroundabout, Hire My Friend) along with countless others and more appearing all the time. These resources allow you to learn how to operate your startup and put you in touch with a huge network of enthusiastic and passionate entrepreneurs.
London's startup scene has grown over recent years into a vibrant ecosystem – filled with many people who are committed and passionate about creating, making and developing. The combination of a supportive financial system in the UK coupled with many resources aimed at aiding entrepreneurs, with a huge community of dedicated startups, makes London one of the best places in the world to begin your entrepreneurial journey.