Start-ups

Mobile is where Europe can really shine

Guest columnist Jos White identifies one of European technology’s sweet spots

This is a guest column in the Telegraph’s Tech Start-Up 100 debate series. The Start-Up 100 is supported by Orrick, Silicon Valley Bank and Microsoft BizSpark.

One of the biggest shifts in the last year or so – and something we’ll undoubtedly see more of in 2011 and beyond – is the rise of mobile internet. If CES is anything to go by, smartphones and tablet devices are going to continue sweeping across the market at a terrific pace: starting with consumers, but soon reaching into business, education and government. This huge growth in the market will be further accelerated in 2011 by smartphone prices coming down significantly, by ever-improving mobile networks and by increasingly ubiquitous and free WiFi networks. Research suggest smartphones sales will exceed half a billion during that year, overtaking PC sales for the first time.

European companies have some big advantages over their American counterparts because of the natural head start they have had. Mobile adoption came much faster and much more rapidly in Europe, spurred on in part by the innovations enabled by GSM networks that weren’t available in the US. As a result, our mobile market has matured faster than America’s has. There’s a whole generation of consumers coming through who expect their first point of contact to be through a mobile device.

Europe is producing some very strong online services – think Groupspaces, Huddle, Spotify, Skype, Tradeshift and LOVEFILM – that have a large and growing user base. The next step for them is to truly unlock the power of their service across mobile platforms. The question these companies need to be asking themselves now is not ‘when can we do this?’, but ‘how quickly can we do this and how can we make it an even better experience than it is on a PC?’ That will be of the key challenges that defines 2011 for almost every web-based business.

The businesses that get ahead will be those that take full advantage of mobile, delivering a quality service that exploits the unique characteristics of the platform, in a way that consumers really love – rather than providing something people can put up with until they get back to a PC.

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Lessons Learnt No 3 – Raise the Right Money from the Right People

I look at raising money as a necessity for most fast-growing tech businesses. The truth is that generally you need to move faster in the world of technology than you do in most other industries and it is normally not possible to do this organically.

Raising money can help a business to accelerate its progress and take advantage of being early into a market. And it shouldn’t just provide an injection of cash, although this is clearly the main benefit – a good investor should also provide additional value to the business in terms of support, guidance and connections.

My advice when raising money is to raise more money than you need and also to raise it from the right people. Raising money is time consuming and financial projections are generally too optimistic and it’s for these reasons I’d try to raise more money than you think you need, assuming it’s available.

At MessageLabs we raised $30M from US based investors but only about half this amount was built into our ambitious expansion plans and associated cash projections – we didn’t know how we were going to use the rest of it but we were certainly pleased we took it when we did. We raised the money for MessageLabs in 2000, after only 18 months, but there was such momentum in the business and the   overall market for any Internet-based business that we were able to achieve a great valuation and choose from a long line of VC’s. It then turned out that it took a lot longer and cost more than we had expected to scale the business globally. One of the reasons for this was that we made our share of misteps along the way – one of which was an over-reliance on channel partners to sell the service that didn’t work so well when it comes to selling a SaaS service and another was that we needed to completely rethink the architecture of our service in the face of the huge growth in email volumes we were processing. But, most importantly, it’s just a reality of life that things generally take longer and cost more than you imagine they will.

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Reflections on Seedcamp

I attended Seedcamp on Monday as one of the mentors and also to talk to the group about my experiences with being an entrepreneur and building MessageLabs. In a nutshell, Seedcamp is a funding and mentoring programme for start-up tech companies across Europe, Middle East and Africa. It’s run as a kind of competition (think American Idol for tech) where events are held across a number of major cities and from these 23 finalists are selected and assemble in London for an action packed week of mentoring sessions, presentations, workshops, drinks, etc. On the Thursday they all present in front of a panel of judges and a handful of winners are chosen. The winners receive around £50K in funding plus on-going mentoring and support together with all the brand benefits of being one of the chosen few. It was great to meet so many exciting start-ups in one day and hear about their hopes and dreams for the future. I think there were some really high quality prospects amongst the group that will go on to become successful businesses and it’s really fun to get to see near the start of their journeys.

I was impressed with the whole set-up at Seedcamp, which is testament to the great job Saul, Reshma and the team do to bring it all together. I was also struck by how the whole eco-system necessary to drive the success of young tech businesses was well represented, including VC’s, LP’s, entrepreneurs, media, subject-matter experts and of course the start-ups themselves. So all the Seedcamp winners are able to start laying the foundations of an eco-system around them that they will need, not just now, but over the coming years, to help sustain and accelerate their success. It’s precisely this eco-system, on a larger scale, that Europe needs to further develop and strengthen to compete with the US in terms of creating market leading tech businesses.

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