Saul Klein: London’s Start-Up Accelerator

Saul Klein, a scheduled speaker at the March 1st Web Summit in London, helped kick start Britain’s Internet sector 20 years ago, launching a digital version of the Telegraph newspaper when only some 30,000 people in Britain were online. Fast forward 20 years, the Internet represents 8% of the UK’s GDP and Klein, now a tech industry veteran and seasoned investor, is still playing a pivotal role.

Klein, one of London’s best-known and active investors, has a unique perspective on the tech sector’s evolution. After working in the U.S. for marketing group Ogilvy & Mather, where he helped develop its digital capabilities, and for a software start-up called Firefly Network that was acquired by Microsoft and for Microsoft itself, he returned to London where his father, Robin Klein, is an established seed investor and entrepreneur. Klein and his father together created The Accelerator Group, or TAG, as an investment vehicle.

Klein simultaneously opted for a role as an entrepreneur. In 2002, he founded an online DVD rental and movie download service called Video Island, which was later renamed Lovefilm and sold to Amazon in 2011 for £200 million.

But long before that happened Klein left his role as CEO of Video Island to run marketing at Skype. As is often the case, the move came about due to his personal network. Video Island raised money from Index Ventures. One of the partners there, Danny Rimer, knew Klein from his days in the U.S. It was Rimer who introduced Klein to Skype.

Klein said he was sold on Skype the minute he saw the software work. The company’s technology and its traction wowed him. “To see this happening for the first time outside of Silicon Valley and to have it happen in London was an amazing experience,” he says.

After playing key roles at two Index-based start-ups that went on to become home-runs, Klein was named a partner at Index Ventures. He also launched Seedcamp, the London-based microseed investment fund and mentoring program which has been operating in Europe for the past five years.

Having worked for U.S. tech companies and two European tech stars, Klein said he wanted to “take some of that learning and apply it to early-stage entrepreneurs within the European ecosystem. This was one of the inspirations for Seedcamp.”

Seedcamp, which is housed inside the Google Campus in East London, has played a number of key roles. It lobbied 10 Downing Street for the entrepreneur’s visa and it has initiated programs to provide high-level access to investors in the U.S., making it less tempting for companies to enroll in Y Combinator and not come back. During its red-carpet four-week U.S. road show it introduces Seedcamp companies to high-profile investors such as Andreesen Horowitz and Greylock and arranges visits with companies such as LinkedIn, Twitter, Foursquare, Microsoft and Qualcomm. Over 50% of Seedcamp’s 2012 class has raised further capital, including some from U.S. investors such as 500 Startups and SV Angel. It is also helping start-ups better connect with big corporates.

Having spent a lot of time and effort to help seed the market, Klein is now turning his focus to helping growth companies become billion-dollar businesses. To that end, Index Venture Partners has pushed 10 Downing Street to make it easier for young tech companies to go public in the U.K.

Klein believes there is a chance to build world-beating companies from London. “The message is go big and stay home. You don’t need to leave home to build a massive company,” he says.

Going forward there will be lots of opportunities to sell into developing markets. “The world of tech has changed radically,” says Klein, who was born in South Africa but moved to London as a child. “It is no longer about U.S.-only e-commerce, enterprise software, and selling infrastructure to telecom operators. You can build a very big business and never have the U.S. as a market.”

“While the U.S. is still obviously a critical market, I don’t believe the U.S. will continue to dominate tech innovation over the next 10-20 years” he says. “It certainly does not dominate tech adoption.”

The London Klein left in 1995 is radically different from the one he came back to in 2002 or Tech City as it exists today. Britain now has three times as much e-commerce as any other country and double the amount of online advertising and is considered a global tech hub. “We are in the midst of an evolution of a great ecosystem,” he says, pointing to companies like, Alertme and Mind Candy (all Index Ventures investments). “We are 20 years in and we are actually not doing so badly.”



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