As more and more startups spring up in London the emergence of England’s capital city as a global tech hotspot is rapidly continuing. Silicon Valley Bank UK’s senior relationship manager, Oscar Jazdowski talks about London’s tech ecosystem and why it can’t be compared to Silicon Valley.
¤ What is Silicon Valley Bank UK’s remit?
We're fortunate to be the predominant bank to the technology venture capital industry. It started 30 years ago in Silicon Valley and grew up banking early-stage companies and the venture capital community in Silicon Valley at the time. Fast-forward 30 years to where we are today, we have banked over 30, 000 technology companies such as YouTube, Twitter, Foursquare, Pinterest and we work with Facebook. We have a who’s who of top customers who we've seen grow from startups right through to large private companies. For example, we banked LinkedIn, we banked Cisco in the early days and now they're both large public companies. We also bank more than 800 VC and private capital firms, including Kleiner Perkins Sequoia, NEA and Andreessen Horowitz.
About six years ago we said if we want to stay relevant in this industry we have to become a global bank. So we opened up to the UK, India, China and Israel. The remit here is to replicate what we do in the US - become the bank of account to as many great technology companies as we can, and bank the VC industry here as well.
¤ What is your role with SVB?
I’m head of origination, which means overseeing the sales and marketing of the business. We separate our clients into three categories of evolution: early stage, growth stage and then large, private and public. So with an early-stage company, we will lend money to a startup company. So this is a company that may have minimum revenues, or no revenues - it certainly is losing money, but, it has been financed by institutional VC firms, like, let’s say, a Balderton, or an Index. We will come in and put a layer of debt on top of the equity that these companies raised. That way it extends their runway, gives them additional liquidity. As these companies begin to evolve and grow, we start doing more traditional debt financing for growth-stage companies. We're a very unusual bank in as much as we will lend to companies that are raw startups.
¤ You say you can’t compare London to Silicon Valley, why is that?
First of all the history; Silicon Valley has been doing it now for 40 years seriously and we've been doing it seriously for probably six or seven. Also, the risk culture, which is changing in Europe and in the UK, and access to capital. I think the educational establishments are pretty much equal. You have Stanford, MIT, CalTech, and various other universities around the US. But in the UK, you've got UCL, Oxford, Cambridge, Edinburgh - strong universities. But it’s the density and it’s the history. If we fast forward the ecosystem here 25 years, it will never be like Silicon Valley, but it will be significantly larger than it is today.
¤ How is the appetite for risk changing in Europe compared to the US?
Some of it is cultural from that perspective. But in Europe for example we are always reminded of a company like Rovio - Angry Birds was about their 31st, 32nd game. None of the other games had failed, but they hadn't been successful. Or Mind Candy, which is the company that created Moshi Monsters - they were literally out of money. They were about to close down, then they tried one last thing, these little animated objects, got traction and the rest is history. There are a lot of examples where companies haven't succeeded, but that’s where if you listen to the market, pivot yourself to where ever the market's telling you to go, you can actually become successful.
¤ At what stage is London’s tech ecosystem at now?
There’s a lot of startup activity taking place which is terrific because that’s the raw DNA at the base level. Two, three guys and gals getting together, starting a business in the digital media space in Shoreditch or somewhere, be it e-retailing, social networking, videoing -whatever it is. By just having that large number of startups creates a much bigger base. A lot of them will fail, some of them will morph and some of them will get together. But when you have an ecosystem now where you're starting 5,000 technology companies a year in London or Oxford or Cambridge, as opposed to 50, you're going to have a much stronger ecosystem.
¤What digital media sectors is Silicon Valley Bank UK working in at the moment?
One of our companies is called the Foundry, and it does post-production video for movies. There’s another company here we don't bank called the Mill, which does the same thing. People don't realise, a tremendous amount of the special effects in Hollywood today are made by companies in the UK.
It goes back to what do we have core strength here in the UK and in London: media, advertising, video, and it is all those things which you mash together that creates businesses. Another is financial technology; the City of London has more than 500 banks. There’s a myriad of companies around London and the City supplying software to a financial community for compliance, for trading platforms, for risk analysis. Again, all this grows out of what we have in our own backyard.
¤ What must London’s ecosystem do to evolve in the coming months?
The Olympics is going to focus a lot of people eyes on London. It’s a great opportunity for London to position itself. London has a brand; if you mention London to anybody, 7bn people in the world, and they immediately get an image of London. What we need to insert into that brand image now, alongside the history and pomp and circumstance and the royal family, is that it’s a hip city, which we know, but it’s a technology city. Look at Berlin over the past three years; people now talk about Berlin as a digital centre. Three years ago people said what, Berlin, for a holiday? What do you mean? So it can happen pretty quickly and that’s a huge advantage that London has. It has a huge global brand and we should leverage that brand and say we have the royal family and this and that. But we also have great technology in London. Around Silicon roundabout now there’s buzz. Much more so than a year ago – you can actually really feel it.