Coronavirus: London’s future remains extremely bright
In recent weeks, millions of us have begun to work from home for the first time. In the current climate of uncertainty, many wonder about the discrete workforce and supply chain that makes their daily life possible, and realise how we are all deeply interlinked, globally and locally. As millions of us make this transition, even the future of work as we know it is up for debate.
The current global crisis needs to be treated with the seriousness and careful attention that it deserves, and it would be foolish to put an end point on that at present. This crisis will have profound social and ideological implications. Every one of us, every single company, hence every industry is impacted. Therefore, it is fair to ask, will investors continue to invest in London during this period of understandable uncertainty? I believe that they must, and they will.
After all, there is a common innovation playbook for London. It is a global financial centre unmatched at churning out fintech, insurtech, and regtech startups that are either eating the incumbents’ lunch, or making their lives easier. It’s not Silicon Valley, not quite New York, though it is doing extremely well and is almost at par.
But the London story is changing — or rather, is being added to. As someone working for a venture capital (VC) business in London — but whose firm is Singaporean, with offices all around the globe — I didn’t start out here. However, when relocating to Europe, I moved to the Big Smoke, after I noticed a few trends that made it stand out.
Of course, by several metrics, it’s behind American and Chinese counterparts. But I don’t think that we’ve seen everything this city has to offer just yet. So why am I so bullish on London?
First, it is the place to come to, not only for European founders, but from anywhere in the world. Because of its financial heritage, London is remarkably good at early-stage funding. The legal and regulatory environment is established and smart, and ease of doing business is high.
Talent is extremely ambitious by design: people move here to set up companies, and there is a backlog of expert, capable people ready to get started. Our programmes receive the highest number of applications from this city, more than anywhere else in the world, even beating New York.
This is also why the likes of Sequoia — the early-stage Silicon Valley VC firm behind Google, Apple, Facebook, Instagram and WhatsApp — is setting up offices here in London.
Recently, one of our investments, Unlock — an HR-tech SaaS provider — launched in London; and the team was so ambitious that they started converting corporate customers across London, Singapore and New York at the outset. Meanwhile, Greyparrot, a computer vision company applying artificial intelligence to waste management, launched in London last year and is already doing pilots across the UK and Asia.
Second, London is the startup capital of Europe, for several reasons. As a market, Europe has undergone a transformation on both a micro and macro level. There are more developers here than in America, and those individuals do not command lofty US salaries.
Meanwhile, from an investment perspective, VC investment per capita in Europe is under a sixth of what it is in the US — this is a market full of untapped talent. What is more, the number of second-time founders is rising, with companies like Skype and Adyen seeing either their founders start new businesses, or early employees doing the same.
Third, London is the gateway to European markets. Launch in London, and you can sell to 750m people. Many companies bake this into their business model. Vamstar, for instance — a company founded in September 2019 — helps hospitals find the best contractors as efficiently as possible. In other words, it is a marketplace for medical equipment and supplies, defying the lack of competition, inertia and information asymmetries that exist in the healthcare space.
And, catching up with Asia, Europe is now a market dominated by the consumer. Because of this, London is increasingly home to innovative companies that are “consumer plays” — not fintech, insurtech or proptech, but customer-first businesses centred on a consumer challenge. And increasingly, as more of us think about the environment and our planet, we’re finding that these businesses are focused on sustainability.
For example, in our latest London cohort, Homethings is making personal care and household products that have a neutral impact on the environment. The team focuses not just on eliminating plastics in the packaging of the product, but on the composition itself. As the capital of the UK, London offers the best launchpad for building a brand, product, and ensuring that chemical formulations were patented and safeguarded.
Fourth, London is one of the most cosmopolitan cities in the world. Every single culture and background is represented here, and respected. This diversity ensures that any idea can be thought up and considered.
This is extremely powerful. There are only a handful of cities across the world where this is the case. So not only do people come here, but they are welcomed and they stay — along with their innovative ideas, life experiences and consequent companies.
Fifth, London is the gateway to the rest of the UK. We are not the only organisation to note the importance of going beyond London. Why? Because the UK has a strong central government and, alongside this, there is plenty of capital — domestic and foreign — flowing across the nation.
For us, this means that if a company wants to establish itself in Leeds, Manchester, or Edinburgh — capitalising on the fantastic specialisations these different cities offer — we know that there will be the funding partners available to help them gain traction and grow.
That is a quality we don’t see in other ecosystems, and another reason why London will remain special, whatever the coming months hold.
Antoine Poirson is a Partner at early-stage venture capital firm Antler.