Great article in today’s Financial Times by Jonathan Moules. He takes a look at the 2007 Seedcamp winners and the amazing progress they’ve made in less than a year. Very appropriate with 2008 Seedcamp Week right around the corner (don’t forget to apply!). Jonathan also talks about the challenges of starting a company in Europe, things that Seedcamp wants to help entrepreneurs overcome.
Financial Times Start-up Struggles, One Year On 6 August 2008
There is a difference between the ways Americans and Europeans start businesses. In Silicon Valley, Steve Jobs famously launched Apple Computer from his family’s garage. In London, Europe’s internet business hub, companies can begin life in a landmark office building known locally as the Erotic Gherkin.
Zemanta, a web software service devised by a team of Slovenians, came to the UK capital last September after winning Seedcamp, a mentoring programme designed to help Europe’s early-stage businesses achieve the scale and might of companies such as Google.
Seedcamp, which is sponsored by the Financial Times, is a week-long series of seminars with some of Europe’s most successful technology entrepreneurs. The closing date for entries for this year’s Seedcamp (www.seedcamp.com), which will start on September 15 in London, is this Sunday.
Zemanta’s experiences, and those of the other five winners, provide some insight into why aspiring European entrepreneurs still find it hard to achieve the impact of their US counterparts.
Ales Spetic, Zemanta’s managing director, says the founders had not intended to start life in the opulent surroundings of One St Mary Axe, the Gherkin’s formal title. But they had so much trouble getting broadband internet connected at their rented house in a London suburb that they crammed six software developers into a Gherkin-based conference room supplied by the Seedcamp lawyers.
“It had a beautiful view,” Mr Spetic recalls, putting an entrepreneur’s positive spin on the irritations of the three-week delay.
Infrastructure problems are not the only barriers to European start-ups. Despite the claims of politicians in Brussels, the European Union has yet to become a single market akin to the US. Ed Spiegel found this was a problem when he tried to expand RentMineOnline, an Ebay-style service for renting items, from his boat on the Amsterdam canals.
Although technically his company remains a European start-up Mr Spiegel has relocated to San Francisco, where he has capitalised on a large US market for private apartment rentals. “It is about establishing the business,” he says, adding that he communicates with his Bulgarian development team using the Skype phone service and flies to Europe regularly to meet his investors.
He insists that he plans to return to Europe and that his location is less important in the internet age. “These worlds are actually quite connected,” he says. His attitude may reflect Mr Spiegel’s American perspective. He was born in the US and studied at Insead business school in Fontainebleau, France.
Back in the old world, entrepreneurs can seem reluctant to travel even short distances. Gordon Guthrie, founder of Edinburgh-based Hypernumbers, needed only to go to London to find investors for his clever idea of doing for spreadsheet numbers what hypertext links had done for words on the web. But the 45-year-old, who formerly worked for the financial services start-up Intelligent Finance, claims that without Seedcamp he would not have known who to contact in London.
“If you want to see a venture capitalist, you need to get an introduction,” he says, adding that he has also benefited from the constructive criticism of his business model by Seedcamp advisers.
Ryan Notz, founder of MyBuilder, an online marketplace for construction services, is one of the most successful Seedcamp winners, having started trading this year and attracted the UK building materials retailer Travis Perkins as an investor.
Mr Notz, who had his eureka moment while working as a stonemason in Bristol, moved to the UK from the US. However, he claims it would be better to seek growth in the UK than rush to expand even into other European countries. “If you spread yourself too thin too early you end up getting nothing.”
Not all of last year’s Seedcamp winners have moved onwards and upwards. Anders Fredriksson won investment for Tablefinder, a search and booking service designed to consolidate existing restaurant websites. But his business model faltered after a rival company did exactly what he had been planning to do shortly after the Seedcamp event.
Mr Fredriksson had to fire all but one of his Stockholm-based team and has survived by taking on freelance consultancy work. Failure has not been easy, Mr Fredriksson admits, but it has given him time to reflect on his mistakes and work out how to avoid them next time.
Where are they now?
Edinburgh-based Hypernumbers has created a way to link numbers on the web in the same way hypertext links words, enabling people to check if a plane is full or a commodity price is dropping. It is the brainchild of Gordon Guthrie, a former BT engineer. Since last September’s Seedcamp, his three employees have been developing the product from their homes, surviving on savings and €50,000 (£34,000) in Seedcamp funding..
Zemanta is a web-based software tool that helps users find pictures and videos to accompany text documents online. Since Seedcamp, Ales Spetic and his co-founders have raised a little over €1m, the largest of any of the winners, from venture capitalists and individual investors. The service is free and has been downloaded almost 20,000 times. Zemanta now employs 15 people, up from six at Seedcamp.
MyBuilder is a web marketplace for construction services in which homeowners receive competitive bids for work. It has raised nearly £500,000 from Travis Perkins, the UK chain of builders merchants, the Accelerator Group, a strategic adviser and investor in start-ups. Ryan Notz, the US-born roofer who created the idea, has built a team of six full-time and two part-time employees and two non-executive directors.
From an initial idea to enable people to rent items online, RentMineOnline has switched its focus to residential property. It has also shifted from a peer-to-peer service akin to Ebay to a business-to-business operation. Property managers provide RentMineOnline as a service to residents, offering them referral bonuses to market properties to friends.
Ed Spiegel, the company’s founder, raised €60,000 in the first quarter of this year and is looking to raise another $1m (£500,000).
Kublax is an online personal finance management service that improves on existing software packages, such as Quicken and MS Money, by updating transaction information. Founded by Sridhar Sethuraman, it has raised just under €1m from angel investors and increased its headcount to 14.
Tablefinder was a search engine for restaurant tables, consolidating existing sites. However, the acquisition of several small sites by a rival rendered the business plan obsolete. Anders Fredriksson, co-founder, was forced to fire all but one of his six staff, surviving on €2,000 for six months. He hopes to revive the business in another form, but has taken on consultancy work to pay the bills.