LONDON is the seventh-best city in the world for entrepreneurs to set up in, but is still some way off its counterparts in the US, research out today claims.
A report from Telefonica Digital, in tandem with US researchers at the Startup Genome, says that while London’s startup scene is the largest and most prosperous in Europe, it still pales in comparison to areas such as Silicon Valley and Tel Aviv.
The inaugural Startup Ecosystem Report, which surveyed more than 50,000 entrepreneurs across the world, identifies the factors that contributed to Silicon Valley’s success, and assesses those factors in dozens of cities. The research gave Silicon Valley an overall score of 0.95, which was based on factors such as diversity, funding and talent. This compared to London’s 0.57.
It found that while London has many similarities to Silicon Valley in terms of the types of business models they operate on, there is a significant “funding gap” for companies trying to get off the ground, and that London’s entrepreneurs are more risk-averse than their US counterparts.
The report also showed a burgeoning startup ecosystem in developing cities such as Bangalore and Santiago.
Ashley Stockwell, who runs the London branch of Telefonica Digital’s startup accelerator Wayra, told City A.M. that London’s major problem was the low “level of investment at the venture capital level”.
“There’s a bit of a chicken and egg situation with how to improve that, but there is more and more success around,” he said, pointing to the likes of Wonga and Moshi Monsters creator Mind Candy, both of which are hot candidates for flotations next year.
The report said that London’s entrepreneurs are on average better educated and slightly older than those in California, and that they work an average of 9.78 hours a day – almost as much as in Silicon Valley.
The cluster of technology startups springing up in London is a pet project of the government, which is working on easing listing rules for high-growth companies.
London mayor Boris Johnson said the report “cements London’s position as the high tech start-up capital of Europe”.