This post has been ‘brewing’ in my mind for a number of years now. It’s only taken a shape worthy of publication thanks to Julian Rowe, principal at Horsley Bridge (that Blue Chip investor in the world’s great tech VCs). During a recent meeting, Julian and I were talking about the cultural differences we’d observed between the US and UK, and discovered how much we agreed on. The words that follow are largely Julian’s, the thoughts are ones we share.
It has often been said that Silicon Valley is not a place, rather a state of mind; a state of mind that celebrates ambitious innovation, coupled with a healthy disregard for fear of failure. As Britain’s tech start-up scene has blossomed in recent years, there are signs that something of a Valley mindset has evolved with it, with the very best British tech entrepreneurs now seeking to build companies as large and disruptive as anything emerging from the West Coast.
However, as the Irish playwright George Bernard Shaw observed, Britain and America are two nations divided by the same language — an observation which points not only to what each understands by ‘gas’ or ‘pants’, but also to how they expresses themselves more broadly. British reserve and American exuberance may be well-worn clichés, but like most clichés they carry an underlying truth. While British and American entrepreneurs increasingly harbour similar ambitions, when it comes to articulating them, cultural norms have a tendency to reveal themselves. In pitch situations, this can materially hamper British entrepreneurs’ ability to raise money.
As a broad generalisation, US entrepreneurs tend to be adept at treading that fine line between confidence and arrogance when pitching their ideas and ambitions. Clearly there will be exceptions to this in both directions. However, the proportion of US entrepreneurs who can articulate a big idea, while demonstrating the energy to execute, is remarkably high.
The evidence is mounting that in Britain there are growing numbers of entrepreneurs with the talent and ambition to go toe-to-toe with the best from the US. Yet after years of sitting in pitches with both British and American entrepreneurs, it has become clear to me that Britons struggle to express their drive and ambition more often than their US counterparts. This is certainly not to say that they don’t have the drive in the first place. Rather that where a British VC (or, like me, an investor who has lived in Britain for many years) may recognise a steely resolve lurking below the surface, US VCs can be left scratching their heads and underwhelmed. Much is lost in translation. Even European VCs with high levels of exposure to US entrepreneurs – and to investing in the ‘West Coast’ style — may not be attuned to a British entrepreneurs’ more reserved approach.
To be clear, it is not being suggested here that entrepreneurs should go into pitches with VCs promising the world (unless, of course, you have a clear plan that demonstrates that you can actually deliver the world). Rather that an understated ‘under-promise and over-deliver’ type of approach does not always work well when raising capital.
We’re also not advocating that a tub-thumping entrepreneur is necessarily more effective than a more reserved, follow-my-example type. This is not the primary assessment that VCs are making when looking for energy and conviction from the entrepreneur. But they do want to sense – and see — that the ambition is there to build a massive company, as stated goals can quickly become the targets towards which people end up aspiring. VCs also want to see that a founder will have the self-belief required to weather the inevitable challenges and setbacks along the way.
It is undoubtedly a positive for the British tech ecosystem that in recent years US VCs have proven willing to invest more frequently and at earlier stages in the most promising British tech start-ups. The experience they bring of helping build early fledgling companies to massive sustainable success stories can be invaluable. Furthermore, with the US a vital market for most large tech companies — and with most of the world’s tech giants headquartered there — the deep US networks some VCs can bring are immensely powerful.
A number of British-based companies are likely to attest to this such as Huddle, Just Eat, Hailo, SkyScanner, NewVoiceMedia, Far Fetch, ViaGoGo, Funding Circle and TransferWise, all of which have attracted top-tier US venture capital. Moreover, at Index we routinely partner with US VC firms in backing tech companies from across Europe. Take Criteo, elasticsearch, iZettle, Mimecast, Soundcloud and Zendesk, for example.
Yet in order for more British tech startups to tap into this trend, perhaps tech entrepreneurs in the UK need to get better at speaking to American investors in their own ‘language’.
Perhaps, too, US investors need to recognise that the understated, self-deprecating British entrepreneur may in fact have the hidden depths required to build a really big business. Don’t mistake reticence for lack of ambition, nor a seemingly modest plan for a lack of confidence.
There’s every chance they have both in abundance. They just have a different way of communicating it.
Postscript: I've been fortunate, because of the fact that I've lived in this green and pleasant land for so long and can recognise the traits, to have backed some pretty extraordinary UK born entrepreneurs.
Think Alex Chesterman (Zoopla), Richard Moross (Moo) Michael Smith (Mind Candy) Graham Bosher (Graze), Iain Dodsworth (Tweetdeck), Alex Saint and Tom Valentine (Secret Escapes), Greg Marsh (OneFineStay), Ed Molyneux (FreeAgent), Bec Clarke (Astley Clarke), Ian Hogarth (Songkick) and Simon Nixon (MoneySupermarket). Not all "tub thumpers" by any means.