The Indian Angel Network might agree. In November, IAN—which involves more than 250 of India’s leading businesspeople—announced that it would open its first investment office outside of India in Tech City. It’s poised to pour millions of pounds into London coffers in the coming years. “Tech City is gaining fame and building a reputation amongst people in India,” says Padmaja Ruparel, the group’s president. “It is being viewed as the new place for startups.”
Tom Hulme, an angel investor who has interests in 21 different startups, says London has a practical advantage over other tech hubs. As both the political and entrepreneurial hub of the U.K., it simply makes life easier for investors. “One of the reasons I choose to live my life in London is I'm in close proximity to different constituents,” Hulme says. “All that I do is within a 30-minute cycle of my office, whereas in the States I would need to fly to D.C. for a politician, New York for a big brand, and Silicon Valley for tech startups. I liken London to a Petri dish that is going to grow some great stuff.”
Corporate giants are swarming the dish. In March 2012, Google opened Campus, a seven-story center and workspace for startups and entrepreneurs. In its first year, more than 60,000 people attended more than 850 courses, workshops, and drinks nights hosted in the building; today more than 100 startups use the facility as their permanent home.
Where Google goes, Facebook tends to follow: Last fall, Facebook opened its first office outside of the U.S. in London’s Covent Garden. It joined a raft of companies including Amazon, Cisco, IBM, Intel, and Microsoft that had also recently expanded their commitments and interests in Tech City. This past October, Rekoo, Asia's largest social gaming company, announced it would build its first base outside of China in Tech City.
Despite the progress, London needs at least one high-profile exit—on the scale of a Facebook or a LinkedIn—to help push its tech sector to the next level. As PayPal’s Peter Thiel can attest, entrepreneurs who cash out become the investors who fund the next generation of startups and offer much-needed advice.
King, the online games giant that started in London, has experienced steady growth over the past decade and is expected to post sales of $1 billion in 2013, which is nearly double its revenues in 2012. The explosion has been fueled largely by the runaway success of the addictive online game Candy Crush Saga, which has been downloaded more than 1 billion times. But King, a bona fide homegrown success story, has decided to list its initial public offering in New York rather than London. As Mitchell of Huddle told me, “If you take identical companies with the same business model but place them in London and San Francisco, the U.S.-based company will raise twice as much money twice as fast and receive twice as high the valuation.” (To keep local businesses on local soil, the London Stock Exchange has made moves to ease the route to listing; this includes reducing the amount of equity that a company must sell from 25 percent to 10 percent.)
Perhaps the most promising London candidate for an IPO is Mind Candy, the online gaming firm behind the children’s website Moshi Monsters. The site’s 80 million registered users adopt brightly colored monsters—such as a monkey ninja named Chop Chop and a shaggy blob named Scarlet O’Haira—and explore Moshi, a virtual world. In 2012 it expanded its staff by 80 percent and saw revenues soar by 60 percent to 47 million pounds (about $75 million). Its Moshi Magazine became the best-selling children’s magazine in the U.K., and a movie is now in the works. It has even had toys in McDonald’s Happy Meals. Energy and optimism abounds at Moshi HQ, where employees conduct meetings in treehouses and transfer between floors using a slide rather than an elevator.
The U.K. government hopes to spread the good cheer to other startups. As part of a 50 million pound regeneration of East London, officials will raze the urban sculpture at the Silicon Roundabout and replace it with “Europe’s largest indoor civic space.” It will include classrooms, co-working spaces, and the latest 3-D printing technology for use by local startups, all housed in a futuristic cube. The Silicon Roundabout will finally have a worthy centerpiece. Less certain, though, is whether it will have a billion-pound valuation to go along with it.