How can e-commerce continue to grow? This guest post by Jamie Murray Wells, founder and Executive Chairman of Glasses Direct, looks at the next wave coming round the corner.

Latest figures show UK ecommerce sales continue to buck the financial doom-and-gloom. There was an overall 14% increase in the year to April 2009. E-commerce certainly looks like the Noah’s Ark of retail during the recession: those companies that have a strong online consumer proposition get a ticket to ride out the storm, and those that don’t, may drown.

There is a lot of he growth in the clothing, footwear and accessories category in particular. According to Forrester, in those categories online sales represented 2-4% in 2003, and now represent over 10% and in some cases, over 15% of the total category.

Where the sale of more ‘generic’ products such as books, DVDs and travel can be seen as something of a first wave of ecommerce, understanding how consumers want to buy high-touch, cosmetic products online such as expensive jewellery, fitted garments and for us, eyewear, could represent something of a second wave of e-commerce.

For companies involved in this second wave of ecommerce, it is not as simple as relying on the old cornerstones of price, range, convenience to attract customers. Our peer group face significant consumer purchase barriers to do with try-on, fit, and product education, that one-by-one, need to be identified and addressed, through continued technological innovation and great customer service, in order to pursued customers to make purchase decisions in our favour over the high street.

A number of interesting businesses ride this new wave of e-commerce innovation shotgun with us:

Blue Nile, is an online jeweller that offers a completely new level of service online, changing diamond shoppers’ habits. They offer enormous amounts of information on the diamonds that they sell, specialist experts on-call, and a massive focus on education to teach you about what you should think about when buying a diamond - far more than you could get in a high street store. The technology on their site allows you to see what different carat diamonds would look like on your finger. This matched with the traditional advantages of shopping online – a massive selection, reasonable pricing and convenience, has meant their business has been a runaway success.

Everyone knows ASOS, which has developed some really strong online celebrity and brand engagement. Suggestions for product ranges and tips from other consumers’ purchases, beautifully shot imagery and the ability to zoom in to inspect every detail complete the picture for the ASOS shopper of high-touch products.

At Glasses Direct [interest declared] we help our customers find their ideal glasses with our Virtual Mirror, which allows people to virtually try on glasses while they’re browsing. We want people to use the resulting images to get other people’s opinions on their looks. ‘Do I look good in this’ becomes a question you can ask your community, not just one shopping companion or the store assistant. Retailers like us are looking at ground-breaking ways to visualise products online, especially when the products face higher than average barriers to sale.

And then there’s Zappos, who use customer service to create a ‘personal emotional connection’ with their customers – something that helps it overcome barriers to buying shoes online, drives loyalty and therefore repeat purchase, and helps them sell over a $1b of shoes every year online.

The second wave of ecommerce isn’t about necessarily unique or high technologies, but how we, as retailers of the fitted or fashion product, can fashion practical online solutions to each of our own consumer bases’ needs. I believe that in years to come it is likely that every retailer will be able to offer price, range and convenience like Amazon, and so the real competition will be around the customer experience and the customer service. We’re just ahead of the curve by prioritising these now. This is why, as I said in a blog post after a visit to the company, Zappos, who calls itself ‘a service company that happens to sell shoes’, it will probably in time, replace Amazon as the e-commerce ‘gold standard’.

Now that the first group of second wave companies has proved that the public, investors and the city all buy in to the prospects of companies dealing thin the high-touch, entrepreneurs should be scrutinising the high street for possibilities. Most of the obvious e-commerce first wave opportunities may well have been seized, but there are many second wave opportunities still out there. Look around and anything that says ‘tailor made’ on, is not sacred to the high street anymore.

Robin Klein’s open letter to the UK government about how to stimulate startups got a lot of response from TechCrunch Europe readers. We’ve decided to run two responses to his letter, making their own case for how government intervention should take place. The below is by Simon Cast, (@Simoncast) a freelance Product Strategy/Product Management analyst. The other response is here.

TechCrunch Europe posted an open letter by Robin Klein of The Accelerator Group to the Chancellor of the Exchequer Alistair Darling and Lord Dryson Minster for Science and Innovation about what to do with purported stimulus funds. BVCA wants the money to go to large VC funds whereas Robin Klein wants to see the money channelled to supporting very early stage companies (amounts less than £100k).

Robin’s logic and reasoning is sound and I agree with them. But it is not a good use of the money for two reasons.

Tech (web) Focused
The idea is far too technology (read web) focused. There are lots of opportunities throughout the UK for entrepreneurs to create businesses; many, indeed most, outside the world of the web. Why shouldn’t someone starting a lawn-mowing business have access to early stage funding as a technology developer? Both create value. We in the technology sector tend to be myopic about start-ups, small businesses and entrepreneurs. Richard Branson can hardly be accused of creating a technology business and yet he is by most measures the UK’s most successful entrepreneur.

Yes, technology creates long term value and wealth, but the vast majority of wealth is created by companies outside of the technology sector using technology and not developing it. It is created by a lawn-moving business using twitter to alert their customers that their lawn is done and having a website where clients can go and book a visit using something like BookingBug to provide the functionality. The lawn-mowing business is creating value through better customer service and consequently generates wealth. Would a business angle or early seed stage fund invest in such a company? What about if it is located in the hinterlands of Wales?

Relying on Judgement
The mechanism for distributing funding relies on someone making a judgement call as to what is potentially a good opportunity. The act of making a judgement takes time and as many commentators pointed out in response to the open letter, time is very precious at the early stages of a business. Waiting more than a month for a response is a massive drag on very early stage businesses. Small business need responses fast.

More problematic is that a person can only make the judgement based on their experience and expertise. Many great opportunities will be bypassed as the judges’ focus on what they know. Now however is a time to fund companies that are moving into new areas and new ways. It is a time to let 1000 flowers bloom. In the end the only real judgement that matters is that of the market. It would be better to create a situation where those companies can be judged by the market rather than a limited individual. The market is crowd-sourced investment decisions.

Proposal
In place of co-investing or creating lots of seed funds, I propose that the UK government create a scheme of income-contingent loans. Under the scheme an entrepreneur can take out a loan that covers his previous salary up to a maximum of £50k to £60k. The loan is paid monthly like salary and is re-paid by the individual (not the company) through the tax system (similar to student loans). Other characteristics of the scheme are:

* The scheme would provide loans for up to 3 people per business in the first year, followed by another 2 new employees in the second year
* The loans are tied to the individual and are re-paid by the individual based on the individuals income
* An individual can only take out a loan under this scheme once every 5 years

An income-contingent loan scheme provides funding irrespective of industry or goods and services. It addresses the funding gap that is a barrier to entry for all entrepreneurs and has a lower administrative burden. The loan scheme can be administrated through the existing Government banks and through an online loan application system which are widely geographically diverse, scalable and most importantly can return a fast decision.

One big objection is the potential for fraud. Nothing involving money is without the potential for fraud and venture funding is not immune (witness Tiger Telematics). By putting the liability to re-pay the loan onto the individual reduces the avenues for fraud using this scheme. The other limitations are also designed to reduce the attractiveness of fraudulent behaviour.

Conclusion
Granted, the loan scheme is unlikely to produce the next Google but I would rather see the loan scheme generate 100,000 businesses all employing an average of 10 people. That would be far more valuable to the UK economy as a whole than 1 Google.

Ideally, you would run both an income-contingent loan scheme and co-invest in early stage investments. However, given the realities the loan scheme is more valuable. The co-investment scheme should follow. By the time the co-investment scheme is up and running many of the first lot of companies that have benefitted from the loan scheme will be ready for their first round of funding.

Robin Klein’s open letter to the UK government about how to stimulate startups got a lot of response from TechCrunch Europe readers. We’ve decided to run two responses to his letter, making their own case for how government intervention should take place. The below is by Jens Lapinski (@jenslapinski), the CEO and Co-Founder of aiHit, a London-based business information company with VC backing. He was previously VP Analysis & Consulting at Library House, where he advised organizations on innovation programs and investment policy. The other response is here.

What the UK needs is a large and sustainable investment ecosystem that covers seed, early, and expansion stage. For the last 50 years, various UK governments have experimented with a mixture of programs and initiatives. I suggest we build future initiatives based on the past’s success, not by repeating the many mistakes that have been made.

1) Seed Phase - Seed new companies by bringing back a modified SMART Award
By far the most successful program that the UK has ever run in terms of giving early stage money was the £45k SMART Award program. The program required founders to invest £15k in their company and, if qualifying conditions were met, they received a £45k grant. This program invested in both startups and product ideas of established companies. The former worked well, the latter not. Later on, the program’s responsibility was given over to the regions and the brand was abolished.

I would suggest revitalizing the SMART program with the following criteria: £15k own investment, £45 grant by government, provided following criteria are met:

- Company younger than 18 months
- Company less than five employees
- This is grant money, not equity investment, not a loan

The grant should be centrally administered. There should be no regional focus. All government loan or equity investment programs at this stage that I am aware of don’t work well. I would therefore make this a grant. This program’s aim is to help early stage companies get off the ground that then grow to employ many people. I would rate a success any company receiving money that lasts for longer than three years and that employs more than ten people at this stage.

2) Early Phase - Seed new VC Firms by creating seed funds in cooperation with established VC firms
The key problem in Europe’s investment ecosystem is the slow birth of new VC fund management companies. Looking around, I largely see fund managers that have been around since before 2000. These fund managers have progressively raised larger and larger funds, moving later and later stage. What any healthy investment ecosystem needs is a continuous supply of new VC companies ‘bubbling up’ from the bottom. These new VC fund managers naturally start out with smaller funds, investing smaller amounts of money per company. Eventually, they will mature, raise larger funds, and move later stage themselves. In order to get VCs to invest early stage, you need young VC firms. So I suggest we create a system that results in a continuous ‘supply’ of new, small VC firms, which invest early stage.

I would suggest expanding and making permanent a program to ’seed’ Seed VC Funds in cooperation with established VC management companies.

Specifically, I suggest doing the following:

- Offer a seed fund to all VC fund management companies that have closed a VC fund larger than £75 within the last year (maybe two years initially) and do this continually.
- The seed fund should have a size of £10-20m
- These funds should be equity investment vehicles, not loan or grants.
- They should have no co-investment limitations
- The funds should be fixed term funds of 12 years
- Ask the VC firm to invest half of the money (at least say £5m), the remainder should be from government
- Ask the VC firm to have the fund managed/run by somebody who is NOT a General Partners at the VC firm’s main fund. This should be somebody from the middle management of the VC firm.

The principle is to establish a program that enables the next generation of managers at VC firms to run ‘their’ own shop. Over time, I estimate that some 30%-50% of these emerging seed fund managers to be successful. This means they will start raising the next fund, eventually separating from the ‘mother ship’, setting up their own VC firm, and thus growing the ecosystem of VC fund managers. The reason why I would establish these funds in collaboration with established VC funds are manifold. In short they are: By sharing the cost of people, offices, etc, the seed fund can work with a smaller amount of money than would be necessary, if it operated on its own. The operations would share deal flow. The seed fund managers could ’soak up’ lessons learned from the more established fund. By aligning the vintage date of the main, larger funds, with the smaller seed fund, the seed fund can have the larger funds invest in follow-on rounds. This means that the seed fund invests in early companies, not so much in small companies. By only offering the seed funds to VC firms with recently closed funds, the government can choose fund managers easily, as closing a new fund means that the VC firm is good at what they do. I would rate as a success that the seed fund returns a positive return over the fund’s life time, and the spin-off the of the seed fund into a new VC firm.

3) Expansion Phase - Ensure that the government remains an active LP/ fund of funds investor
In a time when many LPs have problem honoring the capital calls of their GPs, I strongly suggest the government not waiver. In addition, I would suggest that the government aggressively support European institutions as an LP investor. All of this is already happening, don’t take the foot of the gas pedal!

Summary
Grants at Seed Phase. Collaborative equity investment at Early Phase. Cash as a fund of funds investor at Expansion Phase.

Investing £100,000 in 10,000 start-ups sounds good, but investing it via equity is hard. By making it a grant program, you remove many of the problems associated with the cost of making an investment work at this size. I further suggest investing larger sums of money intelligently in collaboration with existing VCs, and to continue investing even larger sums as an LP at expansion stage.

All of the above has been shown to work. There is real data and real evidence for this. SMART Awards worked in the UK. The support of new VC funds worked all over Europe and specifically in Israel. The European Investment Fund is a heavy LP investor in many VC funds, some of which have done extremely well.

I suggest we do what works first. We can improve from there.

This is a Guest Post by Robin Klein, Partner in The Accelerator Group (TAG), an early stage seed funder of tech startups in the UK and across the rest of Europe. If there is anyone who knows about early stage tech startup funding in Europe, it’s Klein. It chimes in with my post last year that the UK government should make sure any stimulus funds are channeled to into many more startups than proposed, instead of into a lucky few.

Alistair Darling, Lord Drayson - an Open Letter

Dear Lord Drayson,

Put £100,000 into 10,000 startups - not £10m into 100!

There has been a lot of chatter about the Government’s apparent initiative to make £1bn available for innovative early-stage companies.

Apparently, Lord Drayson, the Minister of Science and Innovation in the Department for Universities and Skills is driving this. The BVCA is keen to promote the idea through its influential contacts that this money should be channeled via the large established VC funds.

From where we sit, putting lots more money into the large funds achieves the exact opposite of what I understand the desired the objectives to be.

What is urgently needed in the UK - in order to promote entrepreneurship and encourage innovation - is funding at the very earliest stages.

One of the major drivers for Silicon Valley’s success has been the readily available, quickly raised seed capital. Its not uncommon, even in today’s funding climate to find start-ups funded with $500K in a matter of weeks by angel syndicates led by an agile tech VC.

There is more than enough capital available once companies have proven their technologies, validated the market need and have real momentum. This capital is NOT venture, it is development or growth capital.

The so-called funding gap has never been adequately filled and the growth in size of the leading funds has forced them to move up the food chain and to back relatively fewer pure start-ups.

We have all been wringing our hands at this gap for many years and in the current environment the gap is noticeably widening.

Seed funds are extremely difficult to make work effectively on the classic 2/20 model since it is important that seed funds invest in a large and diverse portfolio (in order to find the winners) while at the same time need to provide a lot of hand-holding to these companies (implying a larger organisation - more partners).

The BVCA’s position is interesting in that it looks at the whole issue from the ‘industry’s perspective’ – you can’t blame them for that – its their job. It’s certainly not being looked at from the entrepreneurs perspective!

We at TAG have had terrific support from some of the large tech VCs but their ability to do many seed fundings is very limited. We need healthy and growing seed capital partners to join us in our quest to find and nurture the next world beaters.

One of the most important and effective vehicles for promoting entrepreneurship in the tech arena in recent years has been Seedcamp [Interest declared: TAG has been an investor in companies promoted by Seedcamp - Editor] - the flood of applicants and the rising quality of these applicants attest to the strength of innovation emanating from Europe.

They are deserving of far greater financial backing.

Robin Klein

Partner, The Accelerator Group (TAG)

PS: TAG is an early stage technology investor with 43 investments currently in its portfolio. We invest actively mainly in the UK but also across Europe and in the US.

[Photo credit]

This is a guest post by Nick Halstead, CEO and founder of fav.or.it

As I am in the midst of raising another round of funding for fav.or.it I wanted to cover some of my thoughts on the government’s recent announcement of further funding for business that is meant to help SME’s survive through the credit crunch. The question is: is there real substance to any of this, or is it just a lot of hot air?

ENTERPRISE FINANCE GUARANTEE SCHEME

This is just a fancy new name for what you probably know as the SFLG (Small Firm Loan Guarantee) - this is a scheme in which the government guarantees 75% of a loan with the rest covered by the banks.

A year ago this allowed loans of up to £100,000 - which was then increased to £250,000. It was something you fell back on if the bank turned you down for a normal loan (in fact it was a requirement that you first applied for a normal loan). I have previously raised a SFLG (over 2 years ago) and found the process reasonably painless except for the fact they take a debenture against your Intellectual Property.

The problem though is that since the beginning of the credit crunch the Banks have not been lending. I inquired to a friendly senior figure in HBOS about 4 months ago and was told not to even bother. I also contacted a few other people in the know within SEEDA and the answer was the same, no lending.

So when I heard about the new initiatives I was curious to find why anything would have changed. Well the statement from the UK GOV declares ‘This scheme will support up to £1.3bn of new lending by banks.’ However, there is one BIG problem, the banks still do not want to lend. I heard today from someone who was at a senior meeting of the “Big Four” banks (that we as tax payers now own) that they declared that in no way was there any going be any lending via SFLG.

My Advice: Ask your bank manager, but when he laughs at you don’t be surprised.

CAPITAL FOR ENTERPRISE FUND

This used to be a fund created by the government that was bid for by various private venture funds who would then invest it. The scheme was originally setup to fill ‘the equity gap’ that being investment between £250,000 and £2million - an area that traditionally is not covered by Angels or VC’s. The fund is re-invested by companies such as Seraphim Captial and Oxford Technology. Both of these in general only deal only with companies that are already generating good revenue.

The confusing part is that the new announcement seems to have converted this equity based funding model into a ‘debt to equity fund’ this may be due to the fact that not enough of the fund has been spent, and or they see it better used to convert bad debt.

My Advice: If you are already generating cash then talk to them, but if you are in that position then the VC’s (such as Balderton) are already in the prowl for good deals.

REGIONAL DEVELOPMENT AGENCIES

The last minor announcement was that a further £25m was going to be invested through the RDA’s. This in theory is the best news for startups as RDA’s such as SEEDA are slightly better at distributing money out via other agencies. One which I have dealt with at length is Finance South East - they have a range of funding models from equity based matching funds (up to £250,000), debt based accelerators (up to £100,000) and also a few other small funds for very early stage ventures.

My Advice: For startups at pre-revenue stage there are a number of good options, but be prepared for a 4-5 month process + a lot of paperwork.

NESTA

Lastly let me just make a scathing attack on NESTA who in theory cover ‘Science, Technology and the Arts’ but in fact would rather not touch Technology with a 9 foot investment stick. I was clearly told that “We do not invest in anything web 2.0 at the moment.” - So feel free to go waste time talking to them, but I would warn against it.

My Advice: Tell them to stick it where the sun don’t shine.

Other Resources

• Region Development Agencies - What They Do
• Assess your eligibility for government guaranteed lending schemes
• Enterprise Capital Funds

If anyone wants contacts into SEEDA, FSE or advice on other government schemes then get in touch via Twitter.

This is a guest post by Ed Freyfogle, co-founder of property search engine Nestoria.

OpenStreetMap started four years ago in the UK as a project to create a free and editable world map. What began as a few geogeeks wandering the streets with their GPS’s has turned into a global movement with over 75,000 registered contributors. The database has improved rapidly in quality and comprehensiveness, as have the tools and services around it. OSM is becoming a viable datasource for complex projects.

The project’s stats are another demonstration of the awesome power of a motivated online mob. The passion of some of the volunteers is shocking; there’s even a student attempting to go his entire time at uni using only OSM maps. The result is that the OSM now compares favourably versus some professionally gathered geodata. Most impressive has been the takeup in Germany: 300 volunteers mapped 99.8% of Hamburg (German), and there is now a German-language OpenStreetMap book.

OSM has spawned numerous related projects, the most prominent of which is OpenCycleMap which takes the base OSM data and renders it slightly differently, giving emphasis to features relevant to cyclists. OCM was recently commended by the British Cartographic Society and is an example of the technical innovation that free access to the underlying geographic data allows. Similarly several groups are working on using OSM for open source routing applications.

As the biggest commercial geodata providers Tele Atlas and NAVTEQ have been acquired, the intensity of their competition in (and focus on) major markets has increased. As a result in many parts of the developing world OSM is now the most comprehensive online mapping available, for example see this comparison of online maps of Baghdad or compare for yourself: Mashad in Iran (OSM, Google) or Kinshasa in the Dem. Rep. of Congo (OSM, Google). This summer’s annual State of the Map Conference had representatives from most major European countries and five continents.

Tellingly, while most of the audience at the conference was the usual hard core of geo-enthusiasts, many businesses were represented (including Google and Ordnance Survey) and there were a few VCs in attendance. Which brings us to the next phase in the OSM’s growth: commercial utilization. Companies have been using OSM data in proof of concept implementations for some time. Recently though the examples have become more prolific and more public: see flickr’s use of OSM. Some businesses are starting to rely on OSM for parts of their product offering, for example Wikitravel uses OSM derived maps in their printed travel guides.

New start-ups like CloudeMade in the UK and Geofabrik in Germany are being founded and funded around the business model of providing services around OSM (see TechCrunch coverage of CloudMade funding). The exact revenues of these companies is unclear (and likely still negligible) but the general concept of providing consulting and value-added services around a free (and complex) asset is well entrenched. This year’s acquisition of MySQL by Sun is only the most recent successful (and European) example. One certainty is that the recent explosion of interest in online cartography has lead to the development of an increasingly sophisticated “open source geo stack” that will pressure traditional GIS software companies.

The big players are increasingly trying to use crowd sourcing methods to improve their proprietary databases - see Tele Atlas’s use of Tomtom data or Google’s MapMaker, while savvy (and smaller) businesses are realising that there is much to be gained by working together with the OSM community. Smaller digital mapping services like Autopoietic Systems, Tann Limited (ASTL) and Holland’s Automotive Navigation Data (AND) have donated significant amounts of data OSM.

OpenStreetMap and the tools around it still have a very geeky feel, making it
easy to be dismissive. Nevertheless, there is no disputing the rapid growth,
improvement, and emergence of a surrounding ecosystem of ventures make this a
project likely to a have global impact for both internet users and businesses.

Full disclosure: the author is a member of the OpenStreetMap Foundation.

The following is a guest post by Nigel Eccles, co-founder and CEO of Hubdub, the prediction trading game.

If Silicon Valley checked into hospital, it would be diagnosed with severe bi-polar disorder. In mid-September, with the bad economic evidence mounting and the markets in freefall, its mood swung from vaunted optimism to extreme despair. Sequoia summed up the change in mood, titling their recent presentation “RIP Good Times”.

So, as we officially head into Bad Times, the first question is, will we see a period of mass extinction similar to the one that occurred after the dotcom bubble? Unlikely. Firstly, the dotcom bubble gave rise to thousands of companies with heroic growth assumptions and high cost bases, serving markets that didn’t yet exist. In contrast, while many web 2.0 companies are still propositions looking for a business model, they often run at less than 10% of the cost of an equivalent dotcom business. Secondly, in retrospect we see the market peak in early 2000 and then the gradual slide as if it were inevitable. However, right up until 9/11 there was a feeling that the market might pick up again and the good times return. This resulted in many companies failing to adjust quickly enough to the new reality which caused many to enter, what Sequoia described as, a ‘death spiral’. Given the speed at which start-ups have cut costs this time around it looks like that mistake is not being repeated.

In fact, Bad Times can be very good for start-ups. In the last tech downturn we saw the birth of Last.fm (founded in 2002), Skype (2003) and MySpace (2004), along with a plethora of other successful web 2.0 start-ups. Tighter times mean less competition, not only for staff but also for users. This is highly significant as pay-roll and cost of user acquisition are the two biggest costs for any start-up. More importantly, a tougher environment forces start-ups to ruthlessly focus on only those opportunities where they can bring value.

On entering a downturn it is often hard to see if the economy will ever recover. I remember in 2002 wondering if there was any future in the web economy (and at least one of my developer friends retrained as a cocktail waiter!). However while expectations of growth got wildly inflated by 2000, the underlying trends continued. People continued to migrate to the internet and also massively increased the amount of time they spent on it. In a downturn, the allure of the web as both cheap entertainment and as a utility gets stronger. And while it may be hard today to picture the wider economy coming out of recession, the most likely scenario is that it will, and indeed within the next two or possibly three years. What will the world look like for start-ups when it does?

Very. Well. Positioned. To understand why, consider Start-up Economics 101. Big companies struggle with innovation, even at the best of times. During the past 10 years in the technology and media industries the smart money has been on start-ups out-innovating more established companies. Whether it is Google besting AltaVista in search, Flickr out-performing Yahoo in Photos or YouTube whipping Google in Video, it was the start-up that came out top.

However in downturns, innovation in big companies is pretty much closed down as the focus moves to cutting costs and eliminating any product lines that arenít showing immediate profits. Last week we saw AOL shutter XDrive, AOL Pictures, MyMobile, BlueString and AOL Video Uploads. Innovation at AOL, like most big companies, isn’t seeing much love these days. However the media sector, like the technology and mobile sectors, is seeing deep structural changes. Consumers are moving rapidly from print and broadcast to digital media. And consumers are being swiftly followed by advertisers. Over the next 2-3 years innovation within the media sector will happen in start-ups, not big media companies. That means when the market returns, media companies will have to acquire if they wish to remain relevant and grow.

Of course many things will stay tough over the next couple of years, with finance in particular remaining tight. However start-ups that can work through that constraint and focus on opportunities where they can create value will be excellently positioned when the economy picks up again. Now is a great time to be an entrepreneur.

With over 20,000 reviews on under the company’s belt, Reevoo is a service that may be influencing what you buy, and what you don’t buy. Founded in 2005 (previous coverage here) the British based startup recently released an iPhone web app. A native application is yet to shows its face, so we’ll be taking a look at the iPhone web-app.

Search for a product you may be interested in and you’re given a list of related products. What I like about this is on the same screen you’re given a clearly displayed rating on every listed item. It’s convenient and saves time. If you’d like to go deeper when researching, or if you wish read those staple reviews the company is built upon. You simply select a result and you’re presented with a clear list of reviews, a guide price and a product image. The format is clean and the information is plentiful.

I spent this morning in my local town center drinking too many cups of coffee, and looking at various electronic indulgences. This is where the application shines. The ability to research the product whilst you’re in the store is an in-expendable tool. Another nifty feature of the app is the ability to purchase products though the merchants signed onto the site. More convenient, and you can now compare prices to find the best credit crunch beating deal.

For what it is Reevoo isn’t anything groundbreaking, even delivered through the iPhone. But the service is good, the app is useful and you will discover that Reevoo is a tool you want to use. Price comparison services are also about to become a great deal more important in the coming recession. Alas.

(By Grant Bell, TCUK’s current intern)

FineTuna is a rather nifty web app from Irish-based Spoilt Child Design that allows you to upload, comment and share images from around the web. Spoiltchild were also the creators of other web apps such as Toddle.com.

So how does FineTuna work? Well, remember that drunken picture of you and that person you don’t know? Upload that image file and FineTuna will present you with a unique URL. This is where the service comes into its own, as you are then presented with the ability to comment on parts of the images. Maybe not the most practical example of what you can do with the service, but the feature set is definitely there to help you along the way.

Not content? Well FineTuna offers up a very handy FireFox add-on. Install and right click on an image, or even an entire browser screenshot. Upload to FineTuna and get the same services as before.

Now there are as many image sharing services on the web as there are fish in the sea. But FinaTuna is one I could actually see myself using. It’s simple, intuitive and an absolute delight to use.

(By Grant Bell, TCUK’s current intern)

Every week, for the next few weeks, we’ll be giving an intern a chance to shine on Techcrunch UK. The below post is written by this week’s intern, Grant Bell, a young entrepreneur (see below).

The pointlessness of most Facebook applications knows no bounds but at least here’s one that appears to be the the first application that enables people to send each other alcohol.

GetThemIn is, currently a Facebook app which lets you send drinks vouchers to friends. Once installed you select your poison, the friend you wish to intoxicate and then pay. You can alert your chosen friend through a text messaging service provided. But there’s a simple way the makers have addressed the issue of teenagers sending eachother bottles of White Lightning. Your friend has to redeem the code through the app, get sent a coupon via snail mail, then take that coupon to a participating store, which is obviously going to check the age of the recipient. Over 1,500 participating stores in the UK, including Threshers, The Local, Wine Rack and Haddows. GetThemIn is the brainchild of Jay Feeney, entrepreneur with promotional experience in product and event management for bars and clubs in Scotland.

There are some issues however, apart from this being an app with less than instant gratification. I would have liked to have seen the inclusion of PayPal as a payment method. The app currently only supports Google Checkout. Although it does support almost all major credit and debits cards, GetThemIn is the type of app you would use at a whim and you don’t want to have to be signing up to a new online payment service like Checkout.

Virtual gifts have been popular on Facebook and are being lauded as a future business model, but at least this is a little more ‘real,’ however so take that at face value is to miss the power that virtual goods will have in the future. And I fail to see how this app is anything other than a marketing gimmick from the participating stores. There doesn’t seem to be any real advantage over buying from an online supermarket and just changing the delivery address, or are we missing something here?

GetThemIn aims to be an app for social sites in the US, Canada, Australia and Ireland and aims to expand to Bebo, Friendster, Hi5, MySpace, Orkut and LinkedIn, though I don’t quite see the how Bebo (largely teens) or LinkedIn (largely business) would let this app on their platform.

Earlier this year 20 UK startups went to Silicon Valley to network with the tech scene. The government-backed trip was called Webmission. Last week 21 UK companies were over in New York on the UK Trade & Investment’s “Digital Mission“, put together by UK online new media community/events outfit Chinwag. Here’s a guest post on the event by Benjamin Ellis.

The Digital Mission was timed to coincide with the Web 2.0 Expo in New York, so there was a long list of sessions and meet-ups both within and around the Expo. For the companies over to drum-up investor support, there were intense discussions with VCs, with more to follow. It might have been a stormy week to be over in NYC, and you know I’m not talking about the weather, but that didn’t slow things at all.

Winston & Strawn (the law firm behind BootLaw) kicked things off with a legal overview of setting up in the US. Tom Watson MP, Cabinet Office Minister and long-time blogger weighed in with a governmental perspective, and an evening reception at the British Consulate introduced the companies to 120 people from the New York tech scene.

The New York community welcomed the Brits with open arms. An invite to Digital Wednesdays was one of the many extended to the companies each evening. Everyone hurled themselves into the scene and networked away, which is harder than it sounds given that it’s a 3-parties-a-night kind of town. Sun Start Up Essentials provided a lunch and talk, and there was even a bit of a cultural exchange with the larger-than-life Gary Vaynerchuk of Wine Library TV fame. You think we have lots of meet ups every month in the UK? That much seemed to happen in about a New York week.

Big take aways? The Atlantic’s not the gap that it used to be. Make no mistake, there are definitely barriers to establishing in the US, but they aren’t insurmountable. The New York scene welcomes new talent, and for those that can keep up with the pace there are big opportunities. With folks like Fred Wilson looking to the UK and Europe, it is pretty likely that other smart money will follow. One way or another, the Atlantic is less and less of a barrier to tech companies. In a parallel to the experience of companies on the Webmission trip, one of the big benefits for the digital mission companies was actually getting to know each other. The mission didn’t just build links in New York, it built them back in the UK too.

The 21 Digital Mission Companies:

B View

Harvest Digital

Head London

Headshift

Huddle

idiomag

KMP Interactive Marketing and Technology

Littleloud

Market Sentinel

Mippin

QuickTV

Slicethepie

Smarkets

Sweemo

Tactile CRM

Tempero

UGAME

UnLtdWorld

Unruly Media

Veedow

WorldTV

This is a guest post by Luke Mitchell, managing consultant with Reach Students, a digital marketing agency aimed at the student market

Once upon a time, students had a social network all to themselves. It required a university email address to access. Inside was an engaging mix of quirky profiles, subversive groups, weighty debates and fantastical conversations about obscene acts apparently committed by daytime television presenters. It was known as ‘The Facebook’. Then, sadly, it lost the The.

Today students share Facebook with everyone else, but if they don’t like it they have options. But do students want or need their own social network? Some may say that question was answered with the failure of Univillage, which came loudly into the market in 2006 with the backing of Brent Hoberman (now of MyDeco), only to bail out a year later.

That move may have had something to do with the launch of yougo, launched last year by the university admissions service UCAS. This connects UCAS applicants and students already at uni.

yougo has over 200,000 registered users, a figure that has grown in waves that correlate with key UCAS contact times: the organisation is in a unique position, easily able to reach hundreds of thousands of new university applicants each year. It is currently claiming to convert a quarter of them to yougo users.

Quickly, yougo has found that students do not want another Facebook all to themselves. But they have shown an interest in something else. In the years before they go to uni, up until the time they eventually arrive on campus, young people are very interested in a secure space online where they can chat and meet with other students who are following a similar path to them.

They are not looking to post Funwall messages and poke each other. They actually have a lot of serious stuff they want to find out.

yougo has responded to this and has started repositioning itself closer to the UCAS brand that students associate with a useful service rather than a fun hangout. They are now looking to pull in the 140,000 younger students they already have on their UCAS Card database and are considering how they can retain users through university to their first career move, by facilitating practical networking and discussion.

UCAS says yougo has met all its targets during the course of its short history. How can it have not? Via UCAS yougo has ‘free’ unrivalled access to thousands of youngsters from middle and high-income families. Clearly, UCAS’s entry into the socnet market has wide ramifications for any private sector startups trying to beak into the student space.

However, the survival and steady growth of yougo indicates that there might be further mileage in private student social networks. Though like yougo, survivors may need to find a ‘niche within the niche’.

At the other end the marketing resources spectrum, with no whopping database to plunder, is GroupSpaces.

The start-up, born out of Oxford University, is probably the sector’s most web-business savvy, having recently pitched to Silicon Valley and received good financial backing from tech-focussed angel investors in the UK.

They have a neat idea.

There are in excess of 25,000 clubs and societies in universities across the UK. Each one of them is organised autonomously by individual students - with a huge churn of personnel. Key members change on a yearly basis, sometimes more often. Each group organiser naturally brings their own systems and ideas, which means new websites and communication methods.

If you looked at the communication picture between students across the UK, you would get a nasty headache. It’s a jamboree that involves everything from Yahoo and Google groups, to Facebook pages, message boards and even wikis.

GroupSpaces has the opportunity to standardise and simplify communications for the entire clubs and societies community. It provides everything a group organiser needs to administer their membership, while keeping things simple, clean and functional. If every student group used the system, GroupSpaces would have perhaps a million students registered.

The idea makes a lot of sense, and has been taken up en-masse by Oxford’s 300-plus groups. The challenge for GroupSpaces will be penetrating the other hundred universities across the UK, each with their own politics and culture, and demonstrating to individualistic clubs and societies that GroupSpaces can make their lives easier.

Finally, the progress of Freewire TV is worth mentioning. This is a well branded IPTV service that streams into university halls of residence across the UK. It’s currently the country’s most subscribed IPTV provider, with over 40,000 customers receiving Freeview and premium channels through the JANET network.

Freewire’s owners, Inuk Networks, won a £9.5 million investment from TV broadcaster S4C and venture capital firm Wesley Clover. They have partnered with Cable & Wireless, meaning they can compete against Virgin to reach residential student customers in cabled towns.

There are a limited number of credible, student-only digital channels available to the marketer. IPTV, with its potential for audience targeting and interactivity, would be an irresistible advertising proposition in the bedrooms and lounges of 2 million students.

Ahead of Seedcamp and TechCrunch 50, Alan Patrick from Broadsight / Broadstuff gives an insight into one of the other UK funding programs in this guest post.

The startup milk round is nearly upon us, what with Seedcamp and the TechCrunch 50 starting soon. However, it would seem that many in the Tech community don’t realise that there are other UK funding programs available as well. We certainly didn’t, in fact it was a tip off by TCUK’s Mike Butcher [Ah, shucks - Ed] that made us enter the Creative Business Accelerator (CBA) program last year.

The CBA program was run by a GLE Capital, and is funded by a combination of bodies such as the London Development Agency, Dept of Trade & Industry, The Institute of Chartered Accountants, as well as supported by the likes of Google, Oracle, NESTA and Kingston Smith.

In the CBA program, 700 entrants were whittled down to a last 70, who all had to make a 5 minute pitch to the CBA panel, of which 15 finalists were chosen. The range of chosen companies was wider than you see in the typical “Tech” bake-offs, we had everything from fashion to film production, but about 1/3rd of the companies were technology or online new media.

To back up a bit - why were we there? We set up Broadsight as a digital media consultancy and technology development house, (becoming “New Media” ourselves via our blog was an accident ). Earlier last year we had submitted a solution to the BBC for a “Zeitgeist Measurement” requirement from their Innovation Labs, which was accepted. We realised later that what we had designed, in the general case, is a real time context search system, so we decided to develop that further. The consultancy side of the business brings in respectable money, but not enough to fund out a product build like this as fast as we would like, so if possible we were keen to obtaining some outside funding. We found that some startup schools like Seedcamp only want the young ‘uns, but we at Broadsight are a bit more seasoned, shall we say

The way the program works is that over a period of about 4 months you attend a number of half day workshop sessions, where experienced people come and talk about various aspects of being a startup. There is also a mentor assigned, a seasoned person to talk to. Sessions range the gamut from legal and fiducial requirements for set up through product marketing and design, effective selling methods, writing business plans, and various other aspects of running a successful business. Calibre of presenters was pretty high overall, but the real value was in the workshop format itself, with questions and comments coming from our wide variety of companies often leading to insights you may not get in a homogenous “all tech” environment. The endgame is a session similar to TechCrunch50, where the companies get to pitch for 5 minutes to a whole range of angels, VC’s etc.

A lot of the course was focussed on learning to pitch, and of course where and how to obtain funding, and when to obtain funding. This was the most fascinating piece – we had a variety of people – angels, VC,s, bankers, lawyers etc come and talk about this, and I think there are some take-aways here that other eager tech startups need to know:

(i) They almost unilaterally told us that money from VC’s etc is the most expensive money available, and if you do take it, take it as late as possible, after exhausting all other sources. The more developed your business is, the better your negotiating position will be.
(ii) There are also a wide range of grants available in the UK – some are 100%, some are 50/50 funded by the government to reduce the VC’s risk (why this is necessary is the source of a totally different post!) – and the T&C and “hassle factor” of getting these grants, while non trivial, are probably no more than the amount of work you will put in to get Angel / VC funding - and you don’t have to hand over equity.
(iii) Never accept the first terms sheet / contract that is put in front of you – this is a negotiation.

The issue the average startup company has is that it has less information of the “art of the possible”, which is why companies like The Funded are useful as they allow startups a better view of what is happening in the market.

Our own conclusion from the session – for the time being anyway - was that we preferred to keep our current business model for a while longer, and first seek grant funding for product buildout. But it was a very useful, and illuminating, exercise to go through.

With the promise of a credit crunch fast approaching, people are starting to tighten their belts. The tech industry can often be one of the first to experience budget cuts and project cancellations but with distributed teams able to work together it doesn’t have to be this way. None of the new collaborations applications cost a fortune and most are free to try/use. The following is a guest post by Jake Stride, md of the Senokian agency which has spun out the TactileCRM suite of tools for small businesses.

Customer Management

Tools like Relanta, started by the Russian Dmitri Eroshenko, allow you to manage and maintain email across your team, and the US based Highrise and Pipeline Deals, allow you to keep your address book online and manage your sales pipeline.

Collaboration

With organisations working from disparate locations and the increase of home working, a good group collaboration tool is a must to ensure projects work in a streamlined fashion and that there is no unnecessary time wasted.

London based Huddle has an excellent online collaboration tool that offers whiteboards, document management and all the tools you need to keep your team working together. Other solutions are available that meet some of the criteria, but not in one easy to use system. Backpack and hosted SharePoint are others to consider.

Meetings

For many the World is now their oyster. Dimdim has launched their Open Source meeting platform for easy online meetings with colleagues and clients, as has Adobe Connect. doodle.ch have a great online platform for scheduling meetings and getting everyone together, and the old favourites such as Webex and GoToMeeting can still be useful.

Project Management

As we found recently there has been much discussion recently in the tech sector about project managment tools. From Chinwag’s uk-netmarketing list, to PHPWM, there are lots of tools available, but none that seem to quite fit everyone’s needs. Huddle’s solution can be a good fit when you need the collaboration tools, and there are offerings from Intervals, ActiveCollab, and Basecamp too.

Project Management is one of the few places that people seem to get particularly passionate about solutions that don’t quite fit their needs and one where it is worth spending a bit of time looking into solutions.

Support & Customer Service

We’ve all heard the adage, it’s easier to keep/upsell to an existing customer than to find a new one. Keeping them happy is promised by new startup ZenDesk’s online support desk system, allowing you to manage your tech support tickets. Resolve RM is currently in beta and aims to make managing day to day customer enquiries and returns easier to manage.

Finance

From Freshbooks to Xero to Free Agent Central online accounting is great and can really make the most of your time. We use Freshbooks as it has a handy feature to email clients when they are overdue and do a certain amount of credit control/chasing for us.

All of the tools mentioned here are web-based, there are many others out there and this is by no means a complete list. For startups and established companies alike, there are plenty out there to make life easier and hopefully help to avoid the credit crunch.

As startups ourselves it’s all about making the most of the resources we have, and using the types of tools we create to help us work smarter.

TechCrunch UK recently ignited a debate around education startups in the UK, but it’s quite clear that the biggest Web 2.0 education market is language learning - and that market, obviously, scales internationally. Here, Nicola Robinsonova of Learnitlists.com pens a guest post about the myriad services out there and which ones cut the mustard.

‘Unless there is a law of physics forbidding a technology, then it’s not only possible, it is sure to be built’ (Michio Kaku) – and where the $20 billion second language acquisition market is concerned, this is certanly true. The essential nature of Web 2.0 (in one definition, the active use of technologies such as social networking, WIKIs, blogs and crowd filtration to create web-based communities who collaborate, create and share content) offers great opportunities for language learners.

In an ideal world we would all speak the same language, or, at the very least, be able to download a new language on demand, perhaps directly into our brains via telepathy (advertising suggest that this already happens - ’speak a new language in 10 minutes’ for example), but, since God smote the Tower of Babbel, and sent us off wandering the earth in distinct linguistic groups, learning a new language has involved some applied effort.

If you are a native English speaker looking to acquire a new language there’s a bounty of resources out there. That you don’t already speak a second language would indicate that the Web 1.0 and pre web techniques available didn’t work so well for you. So… you don’t have time for nightschool, you don’t have the inclination to study from a CD. What is out there in the Web 2.0 world to help you out?

Given that there are 5,000 active languages in the world, the most important factor in determining how useful any specific web 2.0 language service will be to you is simply, do they have your language? There are masses of tools for Spanish, Chinese, French & German… however there isn’t so much around if your were learning Czech, for example. From a business perspective, English is the number one language in the Second Language Acquisition industry - with 750 million learners according to the British Council.

In terms of revenue generation, there are over 100 language sites currently using Google to source advertising, and many sites which offer a straight monthly subscription, monthly payment or freemium model. There are also a growing number which have sourced investment from VC’s – such as Babbel and LiveMocha. Here’s a review of the sites using Web 2.0:

To kick off with bit of learning to take you on holiday: Getawayphrases works with your mobile phone to optimise your recall of words and phrases. Once you’re committed (business model - subscriptions. 9.99 GBP flat fee) you’ll be prompted by your phone throughout the day to revise 7 new words. 4 languages. I hear that their iPhone app will be out later in the summer.

In the iPhone webapp directory already is Cool Gorilla’s lastminute.com talking translator. 6 languages - showing short phrases grouped by category with no sound, making their directory write-up a little inaccurate. They should have gone to getawayphrases.com.

Looking at the iPhone downloads app store there were more apps available, and it was easier to navigate through them. Under travel or education you could find nine main brands from 0.79 – 7.99 euros. Two broad categories – phrases for immediate use when travelling or flashcard style functions for longer term learning, in a range of languages. Brands included iLingo, Babelingo, Lingolook, Lingou, Lonely Planet, Talking Phrasebook (Coolgorilla), AccelaStudy (Renkara Media Group) and Mywords pod101.com.*

Tools to build a bit more vocabulary:
Learnitlists.com (I declare an interest as this is my startup) provides a widget that can be placed on iPhone, any web page, Facebook & your desktop (xp). Currently covering 24 languages, you are given 10 new words every day, from 1500 common words. Functions include learn (with test), listen, speak, write (with translate tool) & share. Most of the functionality is availabe free of charge (ad supported) . You can subscribe to hear sound from a speaking avatar, or listen to other learners for free. There is no work in setting up the service as the 10 daily words are generated for you.

Another free vocab building service is FlashcardExchange – (a more advanced charged version is also available). You can either input your own data or use cards set up by other users. It only takes a little time to work out how to use the site, though the (oh so web 2.0) three step plan is somewhat misleading. No sound available.

If you’re willing to pay for the software, there are many user generated resources available with the SuperMemo service. This clever software tracks your learning and makes revision materials available in tune with the points at which you are most likely to forget your learning – or rather reclassify memories from short term, filing them in either longer term or probably not important.

IngoLingo will train you in 3,000 words over 3 months, with an opt in nag function. This is a free service but too buggy to let me register. The homepage looked good - shame it didn’t work. I might have just been a bit unlucky.

LingQ - With free, basic, plus and premium services - up to 79 USD per month. For a dedicated learner this site looks like a good bet. I was dissapointed that Czech was not included in the 10 languages offered.

MangoLanguages offer 8 languages, plus 3 ESL (English as a Second Language). A nice, slick presentation of lessons, with text and commentary. The site is somewhat secretive about the price for the premium service option. Very nice, but it did feel a bit like the language lab at my secondary school. If they offered Czech, I’d definitely have tried it.

Language Exchange sites are useful once you’ve got some basic phrases and vocabulary sorted, and claim to be not just another social network category. The sites give learners the ability to create relationships with other learners, and use their newly acquired language skills with native speakers. As well as destination sites, some of these provide a limited range of functionality via mainstream social networks such as Facebook. Critical mass is very important & numbers speak loudly – my criteria would be to find a site with lots of Czech users who wanted to chat/skype or whatever. It would have been nice to have access to this info without having to go through the pain of registering on each site – for example by giving me an indication of how many native Czech speakers were online at the time I visited.

Palabea.net has a focus on social networking and informal tutoring. A beautiful site – really pretty design. They are obviously well supported financially with organised PR and articles in the mainstream UK press. Launched earlier this year, a sustained marketing campaign is necessary to garner the user numbers to compete with longer established brands.

My Language Exchange has been going for eight years and has a million users from 133 countries, speaking 113 languages. Not quite as polished in appearance as others in the sector. Facilities include chatroom, e-mail, user created word games, Skype calls to other learners. You need to buy a gold membership (6 USD for a month) in order to initiate contact with other members.

Italki is a social network of people interested in exchanging their language skills. They have 200,000 users and include 90 languages - though 14 main languages. Their Wiki feature is a section called ‘knowledge’ where any user can add videos, audio and text. They also have a Facebook application but the functionality on the app didn’t seem to have acheived critical mass.

LiveMocha is available in English & Spanish - but also covers French, Hindi, German, and Mandarin Chinese, amongst others. It’s currently (predicatably) in beta and free, but will charge for some services in the future. LiveMocha has oral or written exercises and courses, and a community of users from which to find practice partners. LiveMocha secured 6m dollars investment in January 2008.

Friendsabroad:’speak it, learn it, live it’ is a free language learning network. They say they have millions of users from over 200 countries speaking over 80 languages. Their business model is ad suported. A search for Czech speakers came back with 233 people. The interface is in 5 languages. After searching for potential contacts, you can use skype to talk to other registered users. They have a world lingo powered phrase translator to help if you get stuck talking to your new friend. Revenue from advertising, with some premium features in the pipeline.

Penpalvoice - search for web 2.0 penpals - just launched & yet to reach a critical mass of usership.

Babbel is available in English, German, Spanish, Italian and French. This language community provides user generated content as well as ready made lessons, and has a very web 2.0 look. They recently secured an undisclosed investment.

LingoZone – from the grammar on the homepage I got the distinct impression that English was not the first language for this site. LingoZone is an older site, ad supported (Ukranian wives/Muslim brides for example). There’s community, chat & games. I lurked in the chat room for a moment, where guest1 was commenting to sexidanni that LingoZone seemed quiet these days. LingoZone has a popularity board, as well as a score board. It’s rather web 1.0 in appearance though with web 2.0 functionality.

Voxswap ‘the social network for learning languages’ - ‘most popular users’ get their photo on the homepage. Chat, Forums and youtube video content available, with a VOIP coming soon. 2884 users signed up. 22 of them spoke Czech, but the system didn’t let me filter for those who were fluent, rather than beginner level.

What is striking about traditional SLA (second language acquisition) companies is their seeming lack of interest in Web 2.0 technology. All the usual suspects have sites where you can buy books and courses on CD – some offer free downloads (which transpire to be transcripts of material already purchased, or less).

Even in terms of advertising they are notable only for their absence - Natively is the only SLA with a heavy presence on Facebook (downloadable language courses, with no preview, for an undefined fee – alongside the opportunity to pay them for a place in the US Greencard lottery). Where is the Rosetta Stone Facebook app? The Berlitz chat room? The Michel Thomas screensaver?

(If you’re interested in making a quick tour of the above sites, as well as some more old school resources, I’ve put a tour together using jogtheweb.

iPhone Travel downloads:

• Beijing games mini phrase book - (100 phrases with sound) being the cheapest at .79 euros.

• iLingo (by Talking Panda) French/Mandarin, German, Spanish, Cantonese, Italian, Mandarin, Portuguese, Russian, French, Japanese, Korean 7.99 euros. 400 words & phrases with sound.

• Babelingo (Alta Vida) 4.99 euros, 300 phrases, 7 languages. No sound.

• Lingolook Italy, Japan, China, France 3.99 euros, flashcards and phrases.

• Lingou (Edovia) English, German, Spanish & Italian audio, with 13 other languages. 2.39 euros.

• Lonely Planet Phrasebook - Cantonese, Czech, French, German, Italian, Japanese, Mandarin, Spanish, Thai, Vietnamese. 7,99 euros. 600 phrases. With audio (version 2 better quality audio)

• Talking Phrasebook (Coolgorilla) ‘too busy to learn a new language? Download the lastminute.com talking phrasebook and let your iPhone or iPod touch do the talking’. Great idea, but the app didn’t seem to be finished before it went life - with no info or pics available in the directory.

Iphone Education downloads.

AccelaStudy (Renkara Media Group) 11.99. 1200 words in 41 subject areas in the format of flipcards. Dutch, Japanese, Polish, Russian, Turkish, Portuguese, German, French, Italian and Spanish available. Mywords pod101.com (Innovative Language Learning LLC) 7.99 euros Japanese, German, Arabic, French, Italian, Korean, Spanish, Russian. Released on the 12th August this year, the application advocates learning 10 words a day – and so do I.

Despite a plethora of events supporting “new media” types, and even such things as Geek Dinners, the UK eco-system around “hackers” (good programmers, in the true definition) - remains thin. Or so argues Ian Hogarth of Songkick in this guest post.

I believe the most critical thing we can do to improve the ecosystem for start-ups in the UK is to create more community around hackers.

We’ve found that having a community of other hackers around you can massively accelerate both your personal growth, and most importantly for start-ups - the speed at which you can improve your product.

I’m by no means an expert on either start-ups or hacking but I’ll tell you about the experience that convinced me of the value of a local community of hackers.

My background is in statistical machine learning, so when some friends and I wanted a website dedicated to live music, I had to learn some new skills – most critically how to make a website! I’d heard that Facebook had been built on PHP and I liked Facebook so I started teaching myself the basics of building a web app on the LAMP stack and hacking up a prototype. At that point we had a great break and got into Y Combinator (YC). With that we went from being a few friends trying to make something out of an East London flat to being surrounded by a group of 40 really exceptional hackers – 90% of whom had a strong background in web programming. It made an incredible difference. The first thing that became clear was that a web framework could really help to save time. Rails and Django seemed to be the most popular choices and after discussing it with other YC founders we decided to try rails. Immediately things started to move faster, in no small part due to the help and support that some of the other YC companies gave us when getting started with Ruby. The community around YC helped us to find our first hire who was already an experienced Ruby hacker so then we really started to speed up.

When I look back on the craziness of that Y Combinator summer one of the least expected benefits was the value of discussing our ideas with other hackers - on a regular basis. Every week YC would hold dinners for people where we’d show each other what they were working on. The benefits of doing that included the “damn they made a lot of progress, we need to step it up” feeling, the “wow, can you show me how you did that” reaction and most importantly advice on how to do things faster, better and cheaper. Hackers are some of the most generous people I know but even I was surprised to fire an email out asking for advice on efficient ways to set up AB testing and get some code sent back to me within the hour (props Paul).

When we moved back to London after the summer a really strange thing started to happen. We unconsciously became isolated from other hackers again. Although we discussed ideas amongst our team, critically we were missing the structure that those weekly dinners provided. Whenever we did meet other London based hackers (for example the incredibly talented dev teams at Dopplr,
Hypernumbers and Socialistics) we’d get a ton of helpful suggestions and would be reminded again of the value of that discussion. Then we’d be head down again and not meet any other developers for weeks.

I believe that in the UK we aren’t missing great technical talent - we’re missing enough regular events for hackers to meet, in forums focused on hacking. In SF there are developer oriented meetups every night of the week, in New York there’s the mighty Tech Meetup but in the UK we need to do more to make sure those discussions happen.

We’ve tried to have a go at fixing that ourselves by organising monthly ‘Hacker Meetups’ in London. For the past 6 months around 30-60 hackers have come down to our office in East London to demo new technology they’ve built and then go out for some cheap food nearby. This month (on September 4^th) we’re getting the guys from the Erlang training centre to come and tells us a bit more about the benefits of the language and have 4-5 quick demos from people hacking on anything from new programming languages to iPhone apps. When I see 50 enthusiastic people all absorbed in discussions about a new Javascript framework, or catch our CTO in the corner animatedly discussing ideas for scaling with another start-up it feels like those Tuesday nights at Y Combinator. It feels exciting that we can start to create that atmosphere every month in London and I’d love to see similar events happen more and more.

What do you think? Do you regularly meet up with other UK based hackers? How useful is that discussion to you? Would you host a Hacker Meetup in your city?

One of the biggest problems in the UK, and I would say Ireland as well, is that digital or ‘new media’ agencies only ever decide to incorporate new Web apps or social networks into their thinking when they bubble up from Silicon Valley or elsewhere. Few ever think to jump in and create a few apps themselves. I have lost count of the number of agencies I encounter who blabber excitedly about their “Facebook marketing strategy” when the developers inside their businesses could probably have built Facebook, if they’d only been given their head.

But an encouraging trend is smarter agencies starting to use some down-time between those interminable client pitches to build new, interesting projects which might just turn into startup businesses in their own right. One example is Isotoma in York, which created the Forkd social network for recipes (TCUK write up). Another is London-based Howard Baines. It was amongst the first agencies to work with Visual Studio 2008, earned a Microsoft case study and a lot of press as an early adopter of Adobe AIR with their AlertThingy Twitter / FriendFeed / Flickr application. Here’s co-founder Clive Howard’s reasoning about why agencies should start building web apps.

As a web agency we spend most of our time working on client projects that cover a range of services from design and development to strategic advice. As a business we face other challenges such as promoting our brand, winning new clients and staying current with the latest trends and technologies. The relentless pace of evolution within internet technologies creates another problem. That is: how to sell clients exciting new concepts when you have nothing to show in terms of previous work.

I’m sure that many agencies reading this will be very familiar with these challenges and often find themselves frustrated in search of answers. When we started Howard Baines we made it a priority to find a way of addressing this. Our solution was to build our own start-ups.

We deliberately chose new technologies or concepts and then used them to design and build web apps. The process not only provided a way of rapidly moving up the learning curve but also resulted in proof-of-concept applications that we could use to demonstrate our experience to clients and act as great PR vehicles for us. The whole process of developing a web application is also a good exercise for learning more about what our start-up clients go through and improving our own design and development processes.

Of course we’re probably not going to be building enterprise scale applications but we have found that small apps can be good for business and also incredible fun to do. As we usually work to a client’s brief having complete control over a project is great and seeing the results very satisfying. Picking a cool new technology, brainstorming ideas and then pulling something together fast is a fantastic experience on an individual and company level.

As an agency we have all the skills in-house to do these projects and so the only cost is our time. The big question therefore is how can this be done around a busy schedule of client work?

Well, because we had the in-house skills and only ourselves to please, it turned out we could produce these apps in very short timescales. Having seen the numerous benefits to building our own Web apps the time investment required seems extremely well spent. We already have plans for a third app to come later in the year.

We recommend that other agencies start producing their own apps and we look forward to seeing and hearing about what you come up with. Again, the experience of designing and developing an app in a short timeframe could unearth new ways of working that may help you day-to-day. In addition a great little add-on or side project may help generate some great PR for your start-up (remember that Twitter started as a side project).

The following is a guest post by Alastair Briggs from uHavePassed.com

In a search for peers to work with (and share frustrations) I keep an eye out for other education focused start-ups. Unfortunately in the UK there seems to be a problem: either I am rubbish at finding these companies, the start-ups are great at hiding or there are just not that many out there.

The market for Education in the UK is massive - there are 26,562 different schools in the UK, and 157 universities and classroom based learning is only part of the picture. There is also adult education, distance learning, workplace training and many qualifications that could be thought of as niche, but have high enrolments each year. On top of formal education there is informal education that is best represented by language learning and the “Dummies guide to” range of books.

Most of these markets have large established companies specialising in a particular area: school administration software, revision guides, educational software, language teaching etc. These large companies are very focused on maintaining their market share in competitive and established markets and not focused on disruptive ideas but maintaining the status-quo.

Prior to writing this post of I knew of the following start-ups (including ourselves):

• Sums Online - Proving a range of flash based maths activities to a school and home audience - becoming the leader in classroom based PDA maths - marketplace: schools

• WildKnowledge - Providing Windows Mobile based survey software for use inside and outside the classroom on PDAs - marketplace: schools

• Notely.net - A range of tools for students to plan and manage their studies - marketplace: university students

• School Of Everything - A connecting tool to directly link people who want to study with teachers of that subject - marketplace: individual learners and teachers.

• uHavePassed - Online quizzes that can be taken off line focused on Handy Education(convenience) - marketplace: (currently) students for UK driving test

• Learnitlists - Widget based vocabulary training, making personalised learning ubiquitous across many websites - marketplace: language learners

• Fonefonics - Complete multi-media language courses delivered via mobile phone, focusing on teaching English to those without computer access - marketplace: employment agencies, language learners

• Many other language based sites offering elearning

After Mike sent out a twitter question I also found out about coracleonline.com who focus on eLearning for the maritime industry and are the exclusive online provider for the Institute of Chartered Shipbrokers.

This year will see the academic focused mLearnand school focused Handheld Learning conferences hosted in the UK. These conferences highlight two problems: mLearn will have lots of innovation, but little of this is being commercialised and Handheld Learning will be heavily technology focused with Apple, Sony, Samsung and Fujitsu all trying to show how their existing solutions can work in the classroom rather than designing new technology for students. It is not well known that the UK is leading the world in research and trials into PDA use in schools.

Technology has already made its impact on education with eLearning now well established in a lot of subject areas. Asus are really innovating with their EEE PC, which seems to fit the needs of educators and parents - is anyone pushing this device further? The iPhone and iPod Touch are perfect multi-media learning platforms (with restricted input mechanisms) for all ages and across all markets - who is going to innovate and disrupt with these? Social networking offers really new ways to collaborate and learn - who is going to turn this from academic idea into working products?

Let’s start the discussion - the questions for which I have no good answers:

What is stopping people from moving into this market?

Why isn’t there funding focused towards education? (perhaps one of those incumbents might like to think about that)

Why is there a strong bias towards language learning in start-ups? Is this because it is more consumer focused?

In the first of a series of guest posts about the startup scene in various parts of the UK (get in touch if you’re interested in writing one), John Bradford gives us the low-down on the scene in Bristol.

It’s not all stovepipe hats and clay dogs in Bristol. These days its more location aware gaming, mobile media and building businesses. Two Bristol startups you may have heard about are Glasses Direct (James Murray Wells, a UWE graduate) and MyBuilder (Ryan Notz, a Bristol Uni graduate). But what else is going on? As a relative newcomer to the city (5yrs and loving it) here is a quick peek around some local start-ups.

The Watershed, a digital media & arts complex in the heart of the city, has been mixing up creativity and technology for over 20 years.The place for start-ups is their new Pervasive Media Studio, headed by Clare in partnership with HP Labs & with heavy involvement from both Bristol University & UWE. The Studio launched with it’s Media Sandbox competition. Several of the projects came from larger established companies (including Aardman, HMC, BDH, Plot, etc) but the winning project brought together two startup companies, Thought Den (Dan) and Mobile Pie (Richard), to create Happy Packages. After some early PR from the Guardian, Mobile Pie have knuckled down to turn out a number of games and have picked up some awards along the way. They’ve also since been confirmed as one of the first 4,000 iPhone developers and are working with Futurelab to find funding for an exciting e-learning project.

Another Sandbox success is the Comfort of Strangers from the eponymous Simon + Simon. Using a heavily modified mscapes platform, two teams have to ‘discover’ matched players while avoiding opponents. A soft voice in your ear is all that alerts you to the fact that ‘a dancer is nearby, you have lost a life point…’ This ARG team game has been showcased at New York’s Come Out & Play. They now organise the monthly igLab to explore collaborative and social gaming developments. 19-21 Sept they’re turning Bristol into one giant playground… everyone is playing - running, hiding, seeking, finding, escaping, tagging…. igFest.

Just north of the M5, Chris & Craig at BexMedia have been developing a video platform for mobile devices, recently expanding into interactive video after developing a mobile map & video experience for freshers to quickly acquaint themselves with Anglia Ruskin University. On a slightly bigger scale is the Visualise project from 3C Research to bring unprecedented levels of personalised streaming data & video to mobile devices at live sports events. Currently with the World Rally Championships, Nigel’s actively spinning out new startups to commercialise the software & services.

Round the beck end, The Web People started up coding websites like everyone else but Tom quickly developed a web-services management system that made it simple for him to manage lots of websites, with lots of different services, for lots of clients all in parallel. Co-founder Mark saw the opportunity, they’ve just launched an open beta, and are on track for some stellar growth (clients are already beating a path to their door). Also working behind the scenes to spread and gather the word virally is Team Rubber with Andy at the helm. Though not strictly a startup, having survived the dot-com boom, Andy’s a staunch supporter and is actively helping the ‘new guys’ get off the ground.

Behind all these successes lies a growing entrepreneurial ecosystem mixing startups, future clients, partners and investors. This mixing covers everything from the fun & interesting (Dorkbot / igLab), learning & technical (Skillswap / BathCamp), business & sectoral (OpenCoffee / Media Tuesday) to University sponsored (BEN). Its not just the geeks & designers either, lawyers, accountants and exec recruiters are getting behind the start-up scene in Bristol like never before.

Four guys in Edinburgh now run a site aimed entirely at the US. Even the UK section of the site appears under “International”. What have they learnt? The following is a guest post by Nigel Eccles, co-founder and CEO of Hubdub, the prediction trading game.

Many start-ups in the UK face the challenge that their major market is the US. While Hubdub is based in Edinburgh, 75% of our users reside in the US. That was a deliberate marketing decision and here are our top tips on how to better compete there.

1. Decide on your target market and focus

Very early on in the development process we decided that the US would be our target market. The US represented a much larger market and is home turf to our main competitors. Winning there was strategically important for us. Before launch we considered launching in US and UK simultaneously but quickly realised that running two sites would significantly increase our costs without any clear strategic benefit.

2. Launch at a tech conference

We launched at DEMO in January. It was expensive ($18,500) but worth it. We got a huge amount of exposure and also probably pulled forward our launch date by two months (which stopped us from developing a bunch of features our users would never have used). While DEMO was good for us, TechCrunch 50 is probably better tailored to web start-ups and also happens to be free.

3. Use a PR agency for the launch

There is quite a lot of debate about whether or not web start-ups should use a PR agency. If you are a UK company trying to launch at a US tech conference, then the decision is a no brainer. You need a PR agency. There will be 50-80 other companies out there all screaming for attention. No matter how great your product is you need a way to get to key journalists and bloggers.

4. Build a US based board of advisors

Look at the advisory board of US based start-ups in the same industry (but obviously not competitors) and work out who could add value. Use your network to get to those people and start building a relationship.

5. Always write in US English

Dates, spelling and phrases – UK readers are generally used to reading both UK and US English. Many US readers aren’t so don’t make understanding your product harder for them. Also US English will be better for your SEO.

6. Travel stateside regularly

Pack out an agenda of who you want to meet. Work UK hours in the morning and US hours in the evening. Sleep on the flight home.

7. Ask fellow entrepreneurs for help

Nearly every successful entrepreneur I have met is happy to help entrepreneurs starting out. Work out who can help and use your network to get to them. Go direct if you can’t network to them. Make sure that you are asking for something that they can easily help with (e.g. making an intro, quick piece of advice etc), explain who you are and concisely ask for help. At least 80% of the time you will get it.

8. Use web tools to track your industry and competitors

Use Google Alerts and Summize RSS Feeds on your product name and your competitor names to track what people are writing about your industry. Get involved in that discussion.

9. Build a virtual team from your US user base

Apart from you, no one will be more passionate about your product than your top users. If you need someone to evangelize your product then look to hire from your US user base.

10. Start the US visa process early

Skype and Last.fm show that UK based start-ups can compete with US competitors and win, however geography still matters (I know start-ups in Seattle that feel their location is a handicap). Most UK based entrepreneurs want to stay in the UK and help build the start-up community here, but if geography is becoming a serious issue then move to the US, successfully sell to AOL for $850 million and then invest in some UK start-ups.

This is a guest post by David Cruickshank, co-founder of Business IT Online, the web-based suite of business software applications for small businesses. David blogs at Internet business.

Many of the greatest challenges start-ups face involve trust. Earning it, growing it, rewarding it, avoiding the loss of it and recovering it when you fail. To succeed, we need to be trusted in key business relationships and ultimately, our users and investors will vote with their cash as to whether we are trust-worthy or not.

Our personal relationships show us that trust grows with time. Those we trust the most, we have known long enough to feel assured that our trust in them is not misplaced.

This is the start-up’s paradox:

To succeed, start-ups must build trust. Earning trust takes time and start-up businesses are operating from a standing start with no history of competence or credibility. Intriguingly, start-ups are constrained by the very resource they need to thrive.

From a user’s perspective, trust is inextricably linked to risk and motivation. More trust is required when there is a high perceived risk of using a service. Less trust is required when we are highly motivated by the benefits of that service.

A low risk, high value service, therefore, will win trust the quickest and, all else being equal (which it never is), will more likely succeed. The diagram below illustrates this.

Food for thought for anyone planning a start-up; your start-up’s chances of success are better if you are focused in the red or orange areas.

So how does a start-up build trust with so little trading time behind it? The good news is that risk and value are perceptions that can be influenced to some degree.

Case studies, customer service, advisory boards and employment interviews are useful mechanisms for reducing the perceived risk in new ventures. Testimonials, market research and employee stock options can also positively influence the perceived value of using, investing in and working for a new business.

However, communications issued directly from a start-up are not the most powerful trust-influencers. In the early days of a start-up, with very little reputation in the marketplace, it is not surprising that the Holy Grail is to achieve a highly viral propagation of the service. This is not solely because of the obvious economic efficiencies of ‘sneeze marketing‘ but also because we are more likely to trust an independent third party user of a service than we are to trust the provider of that service. After all, if you think about how you originally came to hear about Google, eBay, Amazon or Hotmail, it probably wasn’t from a carefully devised press release or TV ad.

So what can we do to influence trust? An interesting essay on Trust & Trust Building suggests that, ultimately, trust-worthiness is assessed, based on three characteristics:

1. Ability - our competency to deliver on our promises
2. Integrity - our credibility of communication and commitment to fairness
3. Benevolence - the intentions and motives behind our actions

These are interesting because many of the initiatives that we see start-ups deploy to help grow a service, build trust in one or more of the above ways:

• Hiring experienced entrepreneurs
• Building an open service and releasing APIs
• Building partnerships
• Offering referral rewards
• Promoting case studies and demonstrating early traction
• Announcing an advisory board
• Generating and linking to press coverage
• Working with charities and not-for profits

How trust-worthy is your service? Is it low risk? Is it high value? Although the web offers many advantages in business, one of the drawbacks is reduced direct customer interaction. In the end, people like to trust people, which means Internet businesses need to work harder than most at building trust. Take a look at some of the initiatives listed above. What can you do to build a deeper level of trust in your service?

Whatever you do, remember the words of the Dutch statesman, Johan Thorbecke, "Trust comes on foot, but leaves on horseback".

British, and by extension European, startups often talk heatedly about valuations. But across the pond where they’ve been doing this for many years, the talk is usually about how any deal is structured. Sean Glass, founder of Pikum!, has now founded a startup on both sides of the Atlantic, and lays it all out in a guest post.

I was at the Always On Media conference in New York last year, when one of the speakers on a panel about M&A and exit activity made a very sage comment. He said “You name the price, I’ll name the terms - I guarantee I’ll win every time.”

When talking to first time, early stage entrepreneurs about raising money, often the piece that I find they are most interested in is how a valuation will be agreed upon – and how to get it as high as possible. It’s amazing how often this comes up at entrepreneurial workshops, panels, and networking events. In fact, one London VC and I thought that it might be worthwhile to create a handout that said “Forget valuation – 0% of 0 is 0″. Worry about how you’ll make the business work so you can raise money, and a good valuation will take care of itself.

The truth is, when you do get to a term sheet, valuation is important, however the terms are equally, if not even more important. Although there are many key terms, liquidation preference and participation are terms that are probably the most important to understand as they may severely affect the entrepreneurs outcome.

Liquidation preference guarantees that investors get X times their investment prior to any money going to common shareholders in a distrubtion. A great post as to why investors want liquidation preference (and why they’re fair) can be found here:

Participation (or participating preferred) enables the investor to receive both their liquidation preference and their % allocation of the remaining funds to be distributed. Brad Feld discusses the concept and gives a concise description here:

The reason that liquidation preferences and participation matter is that they may affect how much you make when you sell your business as much or more than the pre-money valuation you negotiate. This is particularly true if the business is very successful, but not a “10 bagger” [A 10-bagger means that for every $1 of investment made, the VC fund receives $10 back when they sell their stake (either selling the company to someone else, or after an IPO). 10-baggers are pretty rare].

Let’s look at a couple scenarios based on the idea that you are raising a $5 million series A and targeting a $15 Million Pre-Money valuation (you’ve built a lot so far right?). We’ll then look at how the founders and employees do if they accept the terms offered.

One mythical VC, who we’ll call Simple Terms Ventures, thinks your valuation is high and offers $5M with a 1X liquidation preference, non participating.

Their competitor, Liquidation Preference Capital, thinks your valuation is high, is willing to go to $10M pre-money if you accept a 3x liquidation preference.

Meanwhile, in the office across the road, those Our Terms Fund guys are willing to go with your valuation, however they want a 3x liquidation preference and participation.

Two years after your series A, you get an offer to sell the company for $60 million (3x on your targeted post money for Series A – nice job). How did you do?

You accepted Simple Terms Ventures Proposal
You get $30MM which is shared by common shareholders. Simple Terms gets 3x / 2 years, a really solid return. What if you’d received an offer price of more or less? Here’s the return to common versus total acquisition price would play out at different prices. The key is that as long as the company is sold for more than $5 million, common shareholders will get 50% of each dollar over that threshold.

You Accepted Liquidation Preference Capital’s Proposal
At a $60 million exit value, common shareholders receive 66% or $40. Because you negotiated a better pre-money, you’ve made more money. However, it’s important to note that you had to sell the company for more than $15 Million to get anything.

You accepted the terms from Our Terms Fund
At a deal price of $60 million, you got out $33.75 million, better than the low simple valuation, but worse than the valuation without the participation term. Additionally, again it was important that you sell for at least $15 million to make anything, and from that point, what you make is lessened as investors get the $15 million out first, then their pro-rata share of the remainder.

What’s the right path?
The answer is, like most things with a startup, it depends. Many entrepreneurs and VC’s prefer simple, clean terms where both sides do equally well as the value of the company grows. Other entrepreneurs prefer the higher valuation and larger upside that can be obtained by accepting liquidation preferences of 2-3X or more (and then delivering a huge exit). The key to is understanding that when you’re raising money, it’s not just the valuation, but also the terms that count.

This is a guest post by jamescoops from the mjelly mobile internet blog. 

There’s been a lot of discussion on Techcrunch UK and elsewhere about how to make London and the UK a hub for Web/Mobile 2.0 startups and businesses.   However, London arguably has a much better chance of becoming the leading cluster for mobile 2.0 specifically, the new generation of mobile internet and mobile media services.

Over the last couple of years, a wave of mobile 2.0 startups have emerged in the UK that in many cases eclipse anything found in Silicon Valley.  Those in London include Trutap, Fulham-based Mippin, Reporo and Truphone in Bermondsey, moblog over in Shoreditch, and buddyping and Flirtomatic in Soho. Down the road in Cambridge we’ve got Taptu taking on Google in mobile search, Rummble pushing back the boundaries of mobile location based services and Bango making moves in mobile payments and advertising.  London is also becoming the location of choice for the mobile HQs of more established players such as admob, who just opened their European office in Oxford St, and Google who have a mobile development base in Victoria.   

The UK mobile market is a great place to launch mobile 2.0 startups; all five national network operators are offering 3G services, and faster 3.5G HSDPA networks are being widely rolled out.  There are already over 15m 3G subs, around 25% of all mobile connections.   Believe it or not, UK operators have been much quicker than those in the US, and much of Europe, to enable and support access to third party mobile internet sites.  The last year has seen an explosion in flat rate data tariffs with Vodafone now bundling free unlimited data on mid-range contracts. 

Since the mid-noughties (2005), the UK has been one of the world’s most developed markets for mobile 1.0 services such as personalisation content, which has lead to a well-established local ecosystem of service delivery platforms, sms aggregators and mobile technology expertise.  The UK’s strength in mobile 1.0 is underpinned by a consumer base that is willing to spend money paying for mobile content and services.  This has helped to boost the local mobile advertising market, with UK CPC and CPM rates way above any other territory.   As a result, UK mobile 2.0 startups benefit from valuable local traffic in their home market.

The English language and historic trading connections mean that UK-based mobile services are well placed to expand internationally, not only into the US, but also into the hyper-growth mobile data markets such as South Africa, India and Asia.  Many of the UK mobile 2.0 startups have substantial South African and Indian user-bases and Trutap is reportedly one of the most popular social media services in Indonesia.  Flirtomatic is also beginning to address non-English speaking markets with a rollout across Europe, starting with Germany. 

Social capital, the glue that holds a cluster together, is there in abundance for mobile 2.0 startups in London right now.  There are loads of great events happening, for example, Mobile Monday London is the largest MoMo chapter in the world, hosting events with hundreds of attendees.  There are also plenty of smaller grass roots events like Mobile Geeks of London, Swedish beers and Unlimited Drinks.   

Whilst there is competition from elsewhere in the world, nowhere seems to have quite the same mobile 2.0 buzz as London and the UK. Silicon Valley has its fair share of new mobile 2.0 startups but not at the same level of comparative scale as in web 2.0.  France is surprisingly strong in mobile, with Goojet and Igloo both doing interesting things and Germany has spawned two of the biggest mobile community sites in Pepperonity and Itsmy.   Italy seems to be good at producing big mobile content aggregators like Buongiorno and Dada but there appears to be few mobile 2.0 startups apart from the mobile media sharing community Mobango (which seems to be largely run out of the UK now).  Similarly, Spain is home to Zed, one of the world’s largest D2C mobile content players, but again, fewer mobile 2.0 startups than the UK. 

So it seems that London and the wider UK have a fantastic opportunity to become the dominant hub for mobile 2.0 startups and services.  This raises the question, should investment and activity be focused on new mobile services, where the UK has a greater comparative advantage, rather than on the generic “Web 2.0″ arena?

US entrepreneurs have had notable success with Blog publishing startups, in particular Jason Calacanis (Weblogs Inc sold to AOL for $25m) and more recently Rafat Ali (Paid Content sold to The Guardian for $30m). Ashley Norris, former co-founder of early UK blog network Shiny Media, left the company last week to create another startup - but there is no multi-million sale yet in sight for Shiny. In this guest post for TechCrunch UK he makes his first public statements on the matter, he rails against the BBC, VCs, ad agencies and pores over why he thinks Blog publishing has had only limited success in the UK. Did Shiny ‘cut the mustard’ or were wider factors at work? You decide.

The last five years have seen an explosion in the number of independent commercial blogs, blog networks and websites in the US. The Huffington Post, Sugar Publishing, Perez Hilton, Gawker Media, Engadget - the list goes on forever, and they are just the Web 2.0 premiership. There are thousands of individuals running less high profile blogs and websites who are making a significant living from their work.

In the UK it is a depressingly different story. I have spent the last five years of my life developing Shiny Media, the largest and most successful UK blog network. When I left the company at the end of August it could boast that over four million people each month were either reading or viewing its content. Shiny Media is however one of a handful of independent UK content companies to attract more than a couple of million monthly readers to its sites. There are some amazing blogs and sites out there, Hecklerspray, Anorak, The Spoiler, Coolest Gadgets, Unreality TV and Pocket-Lint spring to mind, but of those only one can claim more than a million monthly readers.

There have been several attempts to develop a UK based blog network (Mink Media, Blog Nation and Messy Media are the most high profile) but many have crashed just months after their launch.

When I first started seeking investment for Shiny back in 2005 I was constantly told I was wasting my time and that the business would never be worth more than a couple of hundred thousand pounds. Ok, so content was rather unfashionable with VCs back then, and what they told me only served to strengthen my resolve to make Shiny successful, but in retrospect I do think that many of the VCs had quite an accurate take on the difficulties facing any developing independent media companies in the UK.

So three years and lot of water under the bridge later here is my take on why I think the US explosion of new media companies hasn’t been repeated over here.

1 Limited number of UK online eyeballs – The obvious reason why UK new media companies haven’t achieved the same success as their US counterparts is down to economies of scale. US sites have at least five times more readers to aim at and that counts for an awful lot when most online advertising is still based around a CPM model (advertisers pay a between 50p-£20 depending on the campaign per thousand people who see their ad). What makes it even trickier is that most UK advertisers for obvious reasons only want their ads to be seen by UK readers. For most UK blogs and established websites Britons count for between 30-50% of their readership, the rest is from the US and other English language speaking countries. It is possible to monetise non-UK ad inventory but it is generally at much lower rates than the UK inventory. The difficulty for most UK blogs and websites is that they simply don’t have enough UK readers to interest ad agencies and brands, so they are left to monetise even their UK traffic using ads that have very low CPMs.

Perhaps an obvious tactic is to forget about the UK completely. Maybe there is something in the fact that two of the five best read blogs to emanate from the UK – Mashable and Coolest Gadgets – are focussed on a worldwide (in the main, US) audience.

2 Lack of imagination in the ad industry – Shiny has been very successful at attracting blue chip brand advertising (Marks and Spencer, Nokia, Dyson, BMW are among the high profile brands who have advertised on its sites). However it has been a long and slow process convincing agencies and brands to advertise on blogs. In reality it should be simple. The readers of the bigger British blogs (if Shiny and other groups like Glam are to be believed) tend to be young, affluent, educated and spend much more time online than they do imbibing other media. However many brands and their agency planers have chosen to play it safe and will work with established media brands or mega portals like MSN, even when the ads themselves will be seen by a less focussed and often an inappropriate audience. There are signs that this is changing, but the lack of brand advertising on sites like Hecklerspray and Unreality TV really is baffling.

3 Lack of UK media entrepreneurs – As someone who wasn’t involved in a start up in the first web boom largely because I spent all my working hours writing about it for magazines and newspapers, I can understand why there are so few media entrepreneurs in the UK. Many of the smarter journalists are way too busy to develop their own start up and there are very few entrepreneurs outside the media who have the capacity to develop media properties. Ironically many of the most successful, blogs and websites in the UK have been developed by freelance journalists who have worked on their sites in addition to writing for others, and in many instances rival media. This is ideal for slowly building an audience, but the emphasis is on the word slowly.

4 Lack of VC support – As a rule European VCs don’t tend to be too interested in media unless it is supported by a technological innovation. Other than Shiny I can’t think of a single online editorially based media play in the UK that has attracted any sizable investment in the last few years. Before Shiny it was Magicalia Publishing and that was many years ago.

Conversely organisations like Next New Networks , the closest US equivalent of Shiny, has several VCs on its board and has so far attracted over $23m in funding. Established US media has also worked with independent new media companies too. NBC has equity in Sugar Publishing, another Shiny rival, while The Discovery Channel acquired Treehugger the leading green blog.

5 Too much competition – Several commentators have suggested that the explosion in successful blogs occurred largely because Americans distrust established media and see it as being in the pockets of big business. I can’t really comment on the US, but I do know that this isn’t the case in the UK. On the surface Britons appear to be fairly loyal to their newspaper and magazine brands. There have been many examples of offline brands that have been a disaster when launched online, but there are some significant successes now too. Existing media companies have much larger budgets than independents and are now starting a serious land grab in building up their online properties. Just check how often you see a UK media company using a Google Adword. However the independents have in many instances a first mover advantage and often a keener understanding of how to work the web to market a site which has kept them one step ahead of big brands.

6 The omnipotent BBC – At the risk of sounding like a stuck record the existence of the BBC and its hugely impressive range of online services does make life even more tricky for the independents. Going back to point one there is only a certain number of UK web surfers and as the BBC hoovers up a large percentage of them the slice of the cake for the independents is even smaller. Secondly, the BBC’s reluctance to link to British blogs and smaller independent media organisations, while at the same time endlessly plugging established media groups (Five Live is one long plug for mainstream media brands) makes life even more difficult.

On a very basic level, if the BBC didn’t have its huge online football offering, then it is very likely that Shiny’s footy blog, whoateallthepies.tv, which is one of the most read football blogs in the world, would be significantly larger. What is even more galling for the founders of Shiny and other indie media groups is that they personally pay a small amount in the guise of the licence fee to fund what in reality are rival sites.

Were the BBC to take a more enlightened view of British independent and social media it could do a lot to encourage young talent to develop UK media properties thereby greatly enriching British media.

Conclusion

On the surface this probably reads like a fairly negative post. It isn’t meant to be.

I do think that British independent new media companies can develop businesses, Shiny is proof of that as are Trusted Reviews, The Register and Digital Spy, but they have to be so much smarter and work so much harder than their rivals in mainstream media. I think online video will provide an opportunity for UK companies to compete on a worldwide stage, however they will need access to fairly sizable funds to do this.

Finally it is worth adding that the economic downturn might actually provide some interesting opportunities for UK bloggers. Several of the most successful indie websites date from around 2002/2003, a time when mainstream media was pulling out of the web after the dot com crash. It is possible that 2009 will go down as the year in which the third wave of indie media started gaining momentum. Here’s hoping.

This guest post is written by Robleh Ali, founder of Zoinetworks.

Although the Internet’s killer application - the Web - was invented in Europe very few of the great consumer web businesses have come from here. The true giants, like Amazon, Google, Yahoo and eBay all rose to become profitable public companies, making billions for the Silicon Valley VCs who invested in them. And share options created hundreds of newly minted millionaires ready to seed the next generation of entrepreneurs in the way Andy Bechtolstein - employee number one at Sun - had for Google.

Europeans see the cash, the culture and dream of how much easier it is to start up in the Valley. Angels and VCs flock to promising founders hoping for a repeat of the last grand slam when Google began life 12 years ago. The following generation has produced some great services but not yet sustainable businesses. Including its most recent loan Facebook has so far taken $446m of external funds, Google needed $26m of outside investment between its launch and IPO. This ready availability of cash has tempted Facebook employees to start selling shares which led Sarah Lacy to wonder:

“It has become strikingly apparent to me in the last few months that this lauded culture of risk taking in Silicon Valley may not actually be so pronounced. In other words: Has our class of startup worker bees gotten soft and spoiled on us?”

Success is forged in adversity, all the great tech founders have been through the fire. Steve Jobs and Steve Wozniak’s first venture together, the blue box, was a failure. When Jobs left college he was reduced to sleeping on friends’ floors and reclaiming the 5 cents on recycled coke bottles. Wozniak showed the Apple I to Hewlett Packard and his bosses confidently predicted failure. In the 90s every big web company turned down Google because a great search engine would only take people away from their ad-laden portals. These founders carried on despite the setbacks.

The value of hardship

I know from founding a company that startups don’t have an easy ride in Europe. Our current environment is like the Valley of old when only visionary investors understood the Internet. Because there are fewer of those raising money is harder. Fortunately money is not the most important component of success - determination is. A few miles from me is Wimbledon. Every year the tournament produces vast sums which the Lawn Tennis Association pumps into the the best facilities, the best equipment and the best coaches. But British players still haven’t won Wimbledon in 30 years. Compare them with the current crop of outstanding Serbian tennis players. They had to train on cracked courts with old equipment. Current French Open champion Ana Ivanovic practised at the bottom of a drained swimming pool. Yet they win whilst the expensively trained British players languish in Futures tournaments.

Making do with less is actually an advantage. It keeps you focused on delivering products people want to use and imposes a discipline which evaporates when you have too much money. Cuil had $33m but it didn’t lead to a great product (so far) and made them think they could mask it with an expensive launch. At a similar stage Google had raised $1.1m and spent it all on perfecting the technology. Their “launch” was an email from Sergey Brin to his friends asking for feedback.

Europeans will continue to build up our own networks but we should play to our unique strengths and not always think “Valley knows best”. Right now we have fewer advantages and it is tougher, but easier is not necessarily better. Ultimately it is the hard times which make us.