eToro, a social stock trading service that was launched in 2007 and has so far raised $31.9 million in venture capital, today has close to four million users worldwide.
It is one of the Future Fifty growth companies in a UK government program aimed at the country’s most promising start-ups. Only eToro isn’t British. And its headquarters is not in the UK — yet.
Seven foreign companies have been accepted on to the Future Fifty list because the government wants to attract more companies to base operations in the UK and/or go public here.
Some question how UK tax payers and the UK as a whole benefit by courting foreign companies that are not required to be headquartered in the UK and wonder if it is wise for the government to be picking winners.
Few Outside of Silicon Valley Have Made It To $1 Billion
But the government mission is clear. To date, few tech companies outside of Silicon Valley have valuations of $1 billion or more. By launching a program designed to help growth companies, the UK government is hoping it can help scale tech companies to the size of a Facebook and Google, cementing London’s reputation as a top tech hub and creating thousands of jobs.
“In the UK we have a fantastic group of companies that are now achieving significant scale, growing very rapidly, partly as a result of the ecosystem developing,” says Philipp Stoeckl, managing director of the Future Fifty program. These include “made in the UK” companies such as Mind Candy and Hailo.
Their ranks are being swelled by foreign companies like Synthesio, a Paris-based social media monitoring company that helps brands connect with customers, and eToro, which was founded in Israel, is headquartered in Cyprus, but now splits its operations between Tel Aviv and London.
London Was The Logical Place To Set Up
“Being part of the Future Fifty enables us to make connections outside of the French tech and VC scene,” says Catriona Oldershaw, Synthesio’s head of UK and Northern Europe. “Also it is a competitive job market out there so now that we have a Future Fifty badge when we talk to candidates it helps them feel confident they are choosing the right horse,” she says.
eToro set up an office in London and applied to join the Future Fifty because “we are scaling our business internationally and it seemed logical to place our center, our hub for the world, in London, one of the biggest fintech centers,” says eToro CEO and co-founder Yoni Assia.
That’s not surprising, as the Internet accounts for more than 8% of the UK’s GDP, more than any other G20 nation according to Saul Klein, a partner at Index Ventures.
It is not just the size of the UK market that is attracting foreign growth companies; companies in the UK raise more growth capital and have more successful exits than those headquartered in other major European cities.
Good Start But No Guarantee Others Will Follow
And now, thanks to the Future Fifty program, they are being offered bespoke services, which include help with things like accounting, legal advice, and access to talent and capital markets.
Synthesio and the 49 others had to meet certain criteria: they were generating revenue with a run rate of at least £10 million over the coming 12 months; they had increased their revenue by at least 30% over the last two years; and they were based in the UK or had a firm intention to build out a presence here, with the possibility of using the UK’s capital markets, says Stoeckl.
So far three of the Future Fifty have had initial public offerings in the UK: Just Eat, AO.com and Horizon Discovery and a fourth, Zoopla, is planning one. There is no guarantee that others will follow. And while eight of the Future Fifty have raised £125 million in funding since the program launched, Tech City must still prove that it can turn a significant number of start-ups into billion-dollar companies.