It took only six months for Adbrain, a Campus London start-up focused on targeted digital advertising across multiple devices, to move from idea to assembling a four-person team, developing a product and pitching for a $1.5 million seed round. One year later, the company, which was originally formed inside the Entrepreneur First program on the third floor of Campus, has moved into its own office space. It has forged strategic partnerships with some of the biggest names in advertising, including London-based mobile-first ad specialist M&C Saatchi Mobile as well as Annalect (part of the Publicis empire). In March, it announced a $7.5 million Series A round. The money will be used to fund expansion into the U.S. and Europe.
Adbrain’s success illustrates how two years on Campus, the Google-owned co-working space in Shoreditch, is not only at the heart of Tech City but the start-ups it is fostering are fuelling London’s lifeblood.
Many are targeting sectors where London is already strong, and a swelling number are moving up and out, helping the UK achieve its goal of becoming a global hub in areas such as ad-tech, fintech, gaming and the merger of fashion and tech.
“The value of London, as [former Tech City CEO] Joanna Shields once said, is that unlike the U.S., in London you have the finance sector, the advertising sector, the tech sector, government and world-leading universities all in one city and when you throw it all together you have an incredible network effect,” says Adbrain’s Davies.
The hope is that the best of breed from this start-up revolution will go global — and public — from London. Aggregating start-ups in one location and making it easier for them to connect to mentors, big corporates and investors is expected to speed up the process.
“It starts by nurturing — by creating the mentorship and education and the right environment for start-ups to execute,” says Eze Vidra, who has headed up Campus London for the past two years. “You have young people who are trying to use technology to solve a problem in a novel and original way, you couple this ambition with the right environment of education and support and that is how you create magic.”
But there are issues that the community must tackle, such as immigration. At the same time that Adbrain is celebrating its funding, one of its co-founders risks having his visa application denied.
The government must also strike the right balance between supporting incumbent banks and fintech start-ups that are out to sell to them or destroy them.
Such challenges aside, few would argue that Campus has played a significant role in helping London start-ups. In March partner TechHub, which operates co-working spaces, opened up new digs to cater to start-ups with teams grown too big for Campus.
On hand to inaugurate the new building was London Mayor Boris Johnson, who chose the occasion to launch a London “Tech Week” that he hopes will one day rival Fashion Week and to announce the nine people appointed to be “London Tech Ambassadors.” The ambassadors are expected to highlight London’s emerging tech strengths as well as traditional ones like ad-tech, gaming, fashion and fintech. Read on to learn how Campus London companies are feeding into these sectors.
Fashion and Retail
London, one of the great fashion capitals of the world, is helping lead the way in the merging of tech and fashion. The direct value of the fashion industry to the UK is nearly £21 billion, said a 2010 report by the British Fashion Council.
Much of that has migrated online, so that the UK has the largest e-commerce sector among the G-20 nations, forecasted to account for 23% of all retail sales by 2016, a market worth some $230 million according to a 2012 Boston Consulting Group report. Dow Jones VentureSource data suggests UK start-ups in the retail and personal goods sectors attracted $830 million in funding from 2003 to the third quarter of 2013; in Europe only Germany, with $844 million, attracted more.
The UK’s online giant is the AIM-listed ASOS. With a market cap in excess of £5 billion the company, founded in 2000, is by a considerable margin the exchange’s largest company. Net-a-Porter was another early pioneer of online fashion.
London-based Lyst, founded by Chris Morton, a former VC, and which announced earlier this year a $14 million Series B round, is one of a new generation of social shopping and curation platforms growing out of London. Founded in 2010, Lyst aggregates onand off-line inventory to produce personal recommendations. It takes a commission for every sale.
Farfetch, founded in 2008, and Boticca, founded in 2010, are examples of marketplace start-ups — matching buyers and sellers without the inventory risk, in Boticca’s case with accessories, in Farfetch’s case garments from independent apparel boutiques. Farfetch has raised over $23 million from Condé Nast, Advent Venture Partners, e-ventures, and Index Ventures.
The global games market is expected to grow to $86.1 billion by 2016, says market researcher Newzoo, with mobile devices grabbing bigger slices of the market.
That is good for Europe, whose companies have been more successful at monetizing new platforms than U.S. companies. In the last 10 years London has become a gaming hotspot, thanks to companies like King (which is filing an IPO in the U.S. valuing it at around $7.6 billion), Playfish, sold to Electronic Arts in 2009 in a $400 million deal, and NaturalMotion, the company behind Clumsy Ninja (sold to Zynga in January for $527 million). Games played for real money — like Betfair and Pokerstars — are also attracting and generating strong talents. Then there is Mind Candy, behind Moshi Monsters, which is morphing into an entertainment company with global ambitions.
King and Mind Candy have benefited from talent that left Playfish when it was sold. Its employees have gone on to at least 20 London start-ups, including new gaming companies like Space Ape Games.
“With [King’s] coming IPO they will also certainly become an active consolidator of the EMEA ecosystem, starting with London,” says Julien Codorniou, Facebook’s Director, EMEA Platform, adding that Facebook considers London to be a key global hub for gaming.
London is a hotspot because you can attract talent from everywhere, says Codorniou. “You could not do that in Paris, for example, because of the language barrier,” he says. “The best UA [user acquisition] leads now work in gaming companies, and they were probably all working for marketing agencies in London before. You can’t build a gaming company now without UA experts, and they are easier to find in London.”
It is little wonder then that Campus London companies like 232 Studios, maker of a game called Epic Eric, are targeting this burgeoning sector.
Global digital advertising spend broke through the $100 billion barrier in 2012, according to eMarketer, and desktop, laptop, tablet, and mobile advertising now account for more than 20% of the market. By 2016 one in four ads is expected to be digital and pundits predict that within a decade advertising and marketing will go entirely digital.
Going digital often means bringing innovation in from the outside, benefiting start-ups that set up in close proximity to London’s advertising sector. For example, the Bakery, an east London accelerator, is helping connect start-ups to big brands as well as advertising agencies.
The cross-pollination doesn’t stop there. Take the case of LoopMe, which specializes in social ad discovery on mobile devices and at press time was in discussions to close venture funding to accelerate its international expansion. Its advisors include digital advertising pioneer Kate Burns, who worked for Alta Vista, DoubleClick, Google, Bebo and AOL Europe; as well as Russell Buckley, a former global chairman of the board of The Mobile Marketing Association and the first employee at AdMob, which was sold to Google for $750 million; he then became Vice President Global Alliances at Google focused on mobile advertising. “London is a very exciting place to be right now,” says Buckley, an investor in, and advisor to, a number of London adtech start ups.
Campus London ad-tech companies like Adbrain are also benefiting from the type of cross-fertilization possible in London. Its angel investors include British ad industry heavyweights such as Nick Hynes, Sacha Carton and Tobin Ireland. “Our engineers and product folks are right here in London and that is a huge competitive advantage,” he says.