Communication between startup scene and financial district ‘an API issue’.
Despite all the innovation and bright minds clustered in Shoreditch, the question still asked of the UK’s premier startup scene is when it will produce the next Google or Facebook.
The Americans have always done things bigger and better than us Limeys, and Silicon Valley is no exception. One of its latest successes is Apigee, a firm specialising in creating mobile apps and APIs to improve companies’ digital operations.
The business was just ranked the 34th fastest growing company in the US in Deloitte’s Technology Fast 500 this month, and its customers include the Financial Times, Swisscom, Telefonica and Marks & Spencer.
But with other companies choosing other European cities such as Dublin as their EMEA base, Apigee opened its own office in London in June 2012, and firmly believes the capital can deliver the next big companies – if its two cities start talking to each other.
Because London does comprise two cities. The old and the new. The City and Tech City. They are totally different worlds, one populated by finance whizzes and the other by IT geeks.
The City is Britain’s financial powerhouse, and England’s only notable industry these days, but despite Shoreditch lying just a few stops away on the Tube, the two cities "speak different languages", according to Apigee advisory board member Al-Noor Ramji.
Ramji joined the board in October after working in technology roles at several major banks as well as BT, and joins Jeremy Perlman in London, who moved from the States to head up Apigee’s EMEA strategy as MD.
"London is still the financial capital of the world and combining it with Tech City is key," Ramji says. "But they both speak different languages. It’s an API issue.
"We can build companies here but they never get to the scale of Google. We can repeat the success of BT by connecting Tech City with the City. When these guys need capital we have to raise capital at the right place at the right time."
There are question marks over banks’ spending power, and willingness to part with their funds, after their largesse was held at least partly responsible for Britain’s economic downturn.
And how much do startups really rely on banks these days? It is more typical that startups looking for investment make contact with VC funders knowledgeable and even specialised in certain areas of tech, while crowdfunding sites like Crowdcube and Seedrs allow investors to back ideas for equity.
Crowdcube co-founder Luke Lang said in August, when his organisation broke the £10m mark in investments, that its success was down to the failure of banks to part with cash.
"Today’s banking system is outdated. Even when the banks do offer to lend, the interest rates and other terms and conditions are often crippling. It’s no wonder more businesses are finding funds through alternative finance sources," he said.
But Ramji insists it is less reluctance staying their hands and more ignorance of investment opportunities in tech.
"Tech City finds funding hard to come by and banks say there’s no-one to invest in but they need to connect and understand each other," he contends.
And Perlman adds: "It’s not always the technology and the technical people [who make a company successful], it’s business people being able to add value to the idea.
"A bunch of hackers playing around doesn’t create business value. They have to have an idea and be sponsored by someone else. It’s important to have a business context."
But both believe London has the potential to become big.
"In Tech City there’s more focus on innovative technology and there’s more than enough talent in London," says Perlman.
Ramji reckons London startups also have the appetite for success, while Silicon Valley has become lazy as its status has grown.
"In a sense it’s become too rich for its own good," he claims. "They will not travel outside 30 miles of their region whereas in London we’re quite used to getting out there."
He believes the answer can be found in merging technology and finance – having experts from one sector working in the other, as his own CV demonstrates.
"The talent pool is big enough to outweigh other factors. We need to recruit tecchies to senior bank boards and the other way around too," he says.
"The Americans do that really well. That is a really important thing to do because it gives each group skills and knowledge it cannot otherwise possess."