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Last Updated: Friday, 23 November 2007, 00:07 GMT
Silicon Valley eyes Oxford entrepreneurs
By Peter Price
BBC Digital Planet

The mood is bullish as Silicon Valley investors gather at Said Business School in Oxford to find new opportunities, new entrepreneurs and new ideas.

Intel chip
Pinpointing brainy entrepreneurs is a challenge

Michael Malone, journalist and former editor of Forbes magazine, explains why Silicon Valley is unique for technology start-ups.

"Silicon Valley has developed a sophisticated process for taking individuals with good ideas and surrounding them with the infrastructure and the money to build new companies," he says.

"It's where you go if you want to start a great company. Everything is there to enable you to do that."

The Valley combines talent and knowledge that is rarely found anywhere else in the world.

Even other US cities can struggle to incubate new technology start-ups, demonstrated when Facebook was forced to move from Boston to Silicon Valley to secure venture capital.

Since its inception in 2000, the "Silicon Valley comes to Oxford" event has helped foster an entrepreneurial environment in the university city.

The number of British venture capital firms has grown in recent years, but Michael Malone says that entrepreneurs still have to work harder to get funding in Europe than the US.

Experienced angels

Reid Hoffman made his fortune by selling PayPal to eBay in 2002.

Unless people are willing to take serious risks over here, I don't think it will happen
Kulveer Taggar, Auctomatic.com

He went on to co-found the social networking site LinkedIn and after securing venture capital to grow the website, he now uses his wealth to invest in start-ups as a business angel.

He is adamant that the Valley remains the best place for him to invest in new firms.

Hoffman says that the highly developed market for start-up finance forces venture capitalists to compete for the best investments.

"There is no better place in the entire world to set up a company than Silicon Valley," he says.

Attitudes to failure

Until recently Kulveer Taggar was a student at the Said Business School.

Silicon chip
Silicon Valley is famed for silicon chips and plenty of money

Now he has returned as an expert, sharing the secrets of becoming a successful entrepreneur.

Mr Taggar co-founded the website Auctomatic.com and, after operating in the UK for 12 months, he migrated to California to secure venture capital funding.

"We decided that if we want to build a big business we should go there," he says. "It increases your chances of success."

Mr Taggar is sceptical that Oxford will become as famous for entrepreneurs as Silicon Valley.

"I think it'll take a very long time," he says. "Unless people are willing to take serious risks over here, I don't think it will happen.

"There's a different mindset in America to taking risks."

That is a view echoed by Paul Graham of Y Combinator, the firm that provided initial seed funding for Auctomatic.com.

Mr Graham says that about two thirds of the companies they invest in fail.

I think investors are being a lot more careful so I don't worry about something bursting as dramatically as it did in 2000
Michael Malone, journalist and former editor of Forbes magazine

Attitudes to failure are so different in America that he says it is unlikely to damage your chances of securing future funding.

"What makes the difference to us is how good the people are," he says. "We don't hold it against them that they've failed."

Fiona Reid is in charge of entrepreneurship at the business school. She agrees with the notion that investors act differently this side of the pond.

"We're certainly more risk averse here and the time scales that people are prepared to wait for dividends is definitely too short."

Credit crunch

Banking is suffering a period of uncertainty due to bad debts in the US sub-prime mortgage market, but delegates in Oxford are quick to dismiss suggestions that their industry will be affected.

"We haven't seen much impact of the credit crunch in Silicon Valley," says Mr Malone.

"The venture capital funds are swollen right now."

American investors gathering in Oxford are confident about the prospect of finding new entrepreneurs on this side of the Atlantic. According to Mr Malone, the real problem is "not a lack of money, it's a lack of ideas."

Malone shrugs off any attempt to compare the current "web 2.0 bubble" with the technology boom of the late 1990s.

He says that the venture capitalists are being a lot more careful with their money while business angels are naturally more cautious because it is their own money at stake.

Ms Livingston agrees.

"I don't think we're in another bubble like the 90s," she says.

"I think investors are being a lot more careful so I don't worry about something bursting as dramatically as it did in 2000."

Mr Malone is confident that the Valley will ride any downturn in the market thanks to the area's financial and emotional resilience.

"We're going stronger than ever," he says. "The Valley's bigger now than when the bubble burst, and that just seems astounding to me. It's a miracle!"

SEE ALSO
The great American ideas factory
04 Sep 07 |  Business

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