Silicon Roundabout's tech startups
Green shoots are flourishing amid a concrete gyratory system in East London. But London's tech startups have very different stories to tell.
The UK Government is keen to hail the success of technology businesses centred around London's Old Street area, known as 'Silicon Roundabout'. Many of these businesses are web 2.0 and social media based - with one or two notable exceptions. As such, they have very different experiences obtaining funding.
GPEG is one of very few hardware technology companies based in London, and is the largest developer of electronic displays for gaming, consumer and professional markets. Founded in 2005, the company employs 13 people and is privately held.
Operating from Woolwich in South London, GPEG is a few miles from Silicon Roundabout, but London has proved a good location for recruitment, says Nick How, the company's CEO. "Before this I ran a company in Dublin, which is great but made for painful recruitment," he says. As a relatively small company, How believes that GPEG will continue its impressive growth.
"There is still a lot of the market that we haven't penetrated yet, and our biggest customers have not been spending to their full capacity in recent years. The opportunity for growth is still large."
However, a lack of funding means that the company cannot grow as rapidly as How may like. "If you look at what funding is available, you can either invest in new technology or expand, but you can't do everything. For that reason we focused on building sales and used that organic growth to fund expansion, including opening our first office in Italy during 2011,"'he says.
Another significant challenge for any growing business is dealing with red tape and health and safety. However, a more significant concern for GPEG is intellectual property and how it can be protected. "Understanding patents, IP protection and so on is much more of a priority for us," says How. "It is difficult sometimes for small businesses to protect their assets and understand the intricacies of the rules."
Finding skilled staff is a constant challenge and the UK labour market simply doesn't have enough people with the skills GPEG needs, says How. "We struggle to find electrical engineers in the UK - for one recent vacancy 90 per cent of the candidates came from outside the UK. We don't have enough people with the right skills."
In the coming months, the company is hoping to complete patent registration for three products, which have been receiving positive press ahead of their launch. "We have a new home improvement product that we're especially excited about," says How.
Mixcloud is an on-demand radio startup that has been described as the 'YouTube of radio' by technology blog TechCrunch. Anyone can upload to the site and the listeners decide who gets exposed. Of course, it has social tools built in so users can share and discover radio through friends. There's also a radio recommendation algorithm to help users find shows they love.
The company was founded by Nikhil Shah and Nico Perez, who met when they were both studying at Cambridge University. With developers Mat Clayton and Sam Cooke, they built an invite-only beta which they marketed primarily through Twitter, signing up around 100 new users a day.
More than 1,000 content creators use the site now. The shows currently lean towards club music and DJs, given the founders' background in organising club nights and warehouse parties. However, they are in discussions with big hitters in the broadcast world to widen the breadth of content.
The revenue model is part ad-funded, part 'freemium', and part based on white-label partnerships that allow content creators a means to distribute and monetise their content on demand to an online audience. Shah is keen to emphasise the fact that Mixcloud is in the intersection between radio and online. It's a good place to be. Traditional radio advertising is a $31.5bn market, but it is being cannibalised with a lot of the spend moving to the online audio ad market.
Songkick is already regarded as one of Silicon Roundabout's founding fathers. Started by Ian Hogarth, Michelle You and Pete Smith out of the back of Hogarth's parents' attic in 2007, the company has arguably remoulded the music ticketing business. The premise is simplethe site alerts fans as soon as their favourite bands announce concerts by indexing many different ticket vendors, venue websites, and local newspapers to create the most comprehensive database of upcoming concerts happening around the world.
The site receives more than five million unique visitors every month, with over 100,000 concerts live on the site, and earns a tiny kickback for every ticket sold. There is an iPhone app and the company has partnerships with the big players in online music, from YouTube to SoundCloud. Plus, it was one of the launch partners for Spotify.
The company also organises and curates one of the region's most useful events for those wanting to work for an upcoming tech startup. Silicon Milkround is a jobs fair and the last event took place in May, with more planned for the future.
Although SoundCloud was originally started in Stockholm, Sweden, it established a base in Berlin soon after and now also has a base in Silicon Roundabout. It had the intention of allowing musicians to share recordings with each other, but later transformed into a full publishing tool, which also allowed musicians to distribute their music tracks.
SoundCloud has benefited from the implosion of MySpace as a platform for musicians to distribute their music by allowing recording artists to interact more nimbly with their fans.
By May 2010, SoundCloud announced it had one million subscribers. Last summer, the site had five million registered users, and investments from Ashton Kutcher and Guy Oseary's A-Grade Fund. To date, SoundCloud has 10 million registered users.
One key feature of SoundCloud is that it lets artists upload their music with a distinctive URL. This contrasts with MySpace, which hosts music only on the MySpace site. By allowing sound files to be embedded anywhere, SoundCloud can be combined with Twitter and Facebook to let members reach their audience.
The service distributes music using widgets and apps. Users can place the widget on their own websites or blogs and then SoundCloud will automatically tweet every track uploaded. SoundCloud has an API that allows other applications or smartphones to upload or download music and sound files. Apps are available for the iPhone, iPad and Android platforms, and a Symbian app is also thought to be on the way.
GroupSpaces was co-founded in October 2007 by David Langer and Andy Young while the two were students at Oxford University. After studying how their > < college's clubs and societies worked - and running a few themselves - the two came up with GroupSpaces.
As a student, Langer was president, treasurer, captain, webmaster and a member of numerous groups. He co-founded GroupSpaces while studying maths at Oxford and was awarded second place in the 2007 UK Graduate of the Year competition. Langer previously worked at JP Morgan, McKinsey & Company and Lehman Brothers.
Andy Young serves as co-founder and CTO of GroupSpaces. He is creator of Selective Tweets, the most popular third-party app to link Twitter and Facebook with over 500,000 users. It is a London-based online company that provides technology to help real-world clubs, societies, associations and other groups manage their membership and activities, and promote themselves online.
The company generates revenue via a combination of premium accounts, targeted advertising and transaction commission from payments made through the site. GroupSpaces has also partnered with many leading nationwide networks of groups such as SIFE, Engineers Without Borders and the British Judo Association.
Wonga.com Ltd of London, UK, is a technology-finance company. It was the first to use fully automated risk-processing technology, providing short-term, unsecured personal loans online and via mobile. The company was founded by Errol Damelin and Jonty Hurwitz. The initial product was the first to provide an instant lending app on the iPhone. As of February 2012, it had funded over three million loans.
Wonga was founded in October 2006. Both Damelin and Hurwitz had previous start-up experience, but neither had any experience of retail banking. When they first started looking for funding, potential investors saw the short-term, small-loans business as an unprofitable, risky backwater. After being denied funding by UK banks, venture capital was eventually secured through Balderton Capital and angel investors.
The first place of business was in a shared office space in St John's Wood, London. After a year of development a beta website was launched in 2007. The mission of the company was "to use Internet technology to solve people's short-term cash flow needs in an equally short-term and responsible way".
Damelin has said that the goal was to disrupt the short-term credit industry by providing transparency, exact control of amount and payment date, immediate access to funds, and no sending documents. The business model of lending only to those who could pay back reliably, as opposed to the much wider catchment practice of payday loans, required an algorithm that could fully determine risk in an automated manner - something they had difficulty developing.
The software development team proceeded with building the Wonga Platform. The philosophy of user control resulted in the development of a graphical interface known as the Wonga Sliders.
UK Technology East London Tech City
East London Tech City is a technology hub that broadly occupies London's East End, between Old Street and the Olympic Park in Stratford. It hosts prominent US technology companies such as Cisco Systems, Facebook, Google, Intel Corporation and McKinsey & Company, and UK companies such as Vodafone and BT have also committed to invest in the hub, alongside Imperial College London, Loughborough University and University College London. The concept is modelled on Silicon Valley, USA.
In 2008 there were around 15 high-tech companies in close proximity of the Silicon Roundabout, which forms the heart of Tech City. Plans to help accelerate the growth of the hub were announced by Prime Minister David Cameron in a speech given in east London on 4 November 2010. A year later, Cameron announced that he was appointing entrepreneur Eric van der Kleij to lead the initiative. By 2011, approximately 200 high-tech firms were occupying the area, signifying a rapid increase in interest.
Barclays has agreed to create a new facility to provide specialist banking services to technology companies based in Tech City. BT has accelerated the roll-out of superfast broadband in the hub area, while Cisco Systems is about to establish an Innovation Centre in the Olympic Park focusing on technical excellence. Facebook has agreed to create a base for their 'Developer Garage' programme in the hub. Google has also created an Innovation Hub in the region to develop next-generation applications and services, while retaining its UK headquarters in central London.
Imperial Innovations, the technology-transfer company of Imperial College London will be advising on the creation of an accelerator space for spinout companies at the Olympic Park. Intel Corporation will establish a new research lab in the hub focusing on performance computing and new energy efficiency technologies, while Loughborough University and University College London is working with the London Legacy Development Corporation to establish a bridge between academia and enterprise in the Queen Elisabeth Olympic Park.
Consultancy firm McKinsey & Company will provide advice on the creation of the hub and help new companies starting out in the area. Tech company Qualcomm will provide intellectual property advice to start-up companies, while Silicon Valley Bank will establish a UK-based bank to provide financing for technology and life science companies based in the hub. UK company Vodafone has committed to bring its Vodafone Ventures investment fund to the hub.
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