Saul Klein on London As A Hot VC Scene

Saul Klein of Index Ventures was recently interviewed by paidContent:UK, and he makes the case that London is getting to be a very hot scene for VC:

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I think that’s really changed the dynamic for London considerably because you can genuinely have big, big international businesses that can be started and grown out of London and Europe that can become significant global players. Skype or Last.fm or Betfair are good examples of that, Figleaves is a good example of that, Lovefilm is a good example of that as well. All of these are either companies that have tens of millions of users all over the world and all doing tens, if not hundreds, of millions of dollars in revenue. That just simply wasn’t the case in the late ‘90s. Success breeds success. The fact that these companies can compete and punch out on a global scale means that people are more encouraged to start business now and really go for it than maybe they were in the late ‘90s.

Another thing I think is important has been the growth of what I would term West Coast-style venture capital in London. In the late ‘90s, while money was available to companies, it wasn’t this sophisticated, experienced capital I think that you’re starting to see being available from the likes of Index and Benchmark, now increasingly Accel and others.

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London has a critical mass, not just of entrepreneurs but also of investors, of corporates, of the talent and the professional services - be they lawyers or accountants or marketing people, investment bankers - to go around the startups. In terms of having all of the ingredients of the ecosystem, London is up there with San Francisco and, in some respects, up there or possibly even ahead of Boston. London’s got to be one of the three best cities in the world to get a company funded and have investors.

My own recent experience in London is more limited, but I see a bunch more going on here than, say, ten years ago. Companies like Last.fm, Skype, Joost, and Moo, and clients of mine, like Xbridge and Playyoo, are based in London, drawing on that talent pool.