INTERVIEW: Edinburgh's tech pioneers
Sharing the future is the code for growth
On reflection: left to right, James Varga, Ian Marshall, Alex Cole and Colin Hewitt
A group of Edinburgh entrepreneurs are putting the city on the map as one of Europe’s leading technology centres and, as GARETH MAGEE finds, the hub approach is working
As one of the early adopters of angel funding, Scotland has been held up across the globe as a fine example of success. However, early adoption means Scotland will also be one of the first markets to go through a full life-cycle.
Business angels are usually cashed out entrepreneurs – with many considering their next steps. In some quarters this has sparked interest as to the way forward. What shape might a succession plan for the angel network take?
If today’s successes cash out and spend, the sector could struggle to attract new money. However, there are moves to foster a sense of community and a ‘pay-it-forward’ approach that will provide a career path for the tech entrepreneurs of today, and culturally bind in enough individuals to enrich the angel sector for many years.
Illuminating the way forward for the angel sector is Codebase, currently the UK’s (and soon to be Europe’s) largest tech incubator. However, according to Ian Marshall, CFO of CogBooks, it’s not just about being the biggest.
“Codebase is a sum of its parts, which is why it works – it’s not just about scale, but an empathetic atmosphere,” he says. “It’s a motivational space, organised yet contemporary, with an international flavour.”
With a stated aim to “build, nurture and grow the next generation of tech superstars”, Codebase isn’t skirting around the fact that the sector must move forward.
Housing a model incubator based entirely on private equity, the utilitarian former civil service block is now a hub that is driving investment into tech start-ups and improving digital skills for business. Ready-made space is attractive to the tech sector, which, as Marshall points out, is ‘all about the idea, and rarely sets much store by surroundings’. The model is working, and growing.
Colin Hewitt, of cashflow software company Float, sought space where he could be with other entrepreneurs. Having been to see Techstars in Boston, he wanted long-term collaboration, as opposed to a short burst. Hoping for more than a shared office experience – he sums it up succinctly: “You can go to a grand hotel and be comfortable, but you wouldn’t expect to share experiences with the other guests.”
For Hewitt, the unexpected benefits are key. “Water cooler moments are vital to our business, and the time saved by having so many intangibles on site – such as hiring from the shared freelance space – is much better invested realising our business ideas.”
CogBooks has secured two rounds of funding from DC Thomson and NESTA, and attracted grant funding from The Bill and Melinda Gates Foundation. The directors found that the merits of being equidistant from its locations in the US and India, made Scotland a no-brainer.
However, they soon noticed another interesting phenomenon – a by-product of a ‘hub’ space. Hewitt explains: “The building has become a shopping ‘experience’ for investors. Visiting their partners in the building often yields more new investment opportunities – and this is something that hasn’t bypassed the tenants.”
For Hewitt this phenomenon is very real: “We met our first investor via someone else in the building. There was no sense of threat or competition – rather a sense of wanting to share success with others.”
Alex Cole, CEO of Peekabu, agrees. His business, which has created cutting edge recognition software, is moving towards second round funding, and since moving in he’s met with potential investors who have happened to be in the building for other meetings.
Disenchanted by the tech scene in his native North America and Canada, Cole was attracted by the new communities being built here. “What we are all doing is weird and new,” he says. “We are a collection of businesses that don’t follow a formula, and it was critical for us to be part of a community in which we could grow.”
The unrestricted environment was vital to Peekabu – being able to collaborate with like-minds over day-to-day business, whilst ‘having the private space to be with your own tribe’ is a winning combination which fosters the ‘passive’ accumulation of experience in a city that hasn’t necessarily built a strong tech legacy. Yet.
Being part of an incubator space isn’t all about Friday-beers and football. There’s a real feeling of sharing and mentoring, fostered by something as mundane as communal space.
James Varga, CEO of Miicard, has developed a digital passport that allows the user to pack up their financial credibility and take it across the internet. He’s a self-confessed start-up junkie, and has been through the loop a few more times than most of his peers, which is why he can be confident that the incubator approach is a good one.
“In the beginning, you had to infiltrate the old boys network, where they set the rules. Discussions took place in dimly lit private member clubs – it wasn’t our natural habitat. Now that a tech culture is emerging and we have a critical mass of entrepreneurs, we’re doing it on our terms, with ambition, opportunism and passion.”
And what of the future? Is being part of an incubator such as Codebase part of the career path towards becoming a serial investor? Perhaps it’s no coincidence that two of the more seasoned entrepreneurs think so. Marshall and Varga both have their eye to the future.
As Marshall says: “My career path has the potential to go in so many different directions. Being involved in angel and private equity backed early-stage companies has provided me with the marketing, finance and operational tools I’d need to be a successful investor myself in the future.”
As for Varga, it’s hard to imagine the native Canadian not going down an ‘angel’ type route; however, he thinks his generation will do things a little differently after cashing out.
“Being hands-on is the most important thing. The next generation of angels will be more honest with investor companies, more realistic and help start-ups to ‘man up’ for the road ahead – if by taking this approach we can light more fires in the sector, then all the better.”
Gareth Magee is a partner at business advisor and accountants Scott-Moncrieff. This article also appears in the May edition of ‘Exchange’, Scott-Moncrieff’s client magazine