London VS San Francisco

I went to California was to see how it compared to London in terms of opportunities for new businesses. The Californian startup environment is huge, it stretches from Palo Alto up to San Francisco and these days the whole region is colloquially known as Silicon Valley (SV).

The brutal reality... It's nearly impossible to compare London and San Francisco. Simply look at the apps on your phone or the websites that you most often visit. I would guess that about 80% of them come from California!

Silicon Valley is a hub of creation for both software and hardware companies. It's awash with VC (venture capital) money, snazzy Tesla electric cars and most importantly smart, motivated people. There is a huge wealth of experience, knowledge and resources that can be accessed in SV if you become part of the network.

There are problems with becoming part of this vortex of technology. The first is American bureaucracy. Foreign entrepreneur's will need a visa to set up shop, these are hard and expensive to get. Most entrepreneurs apply for the O-1, or “Extraodinary Person Visa” - http://www.uscis.gov/working-united-states/temporary-workers/o-1-individuals-extraordinary-ability-or-achievement/o-1-visa-individuals-extraordinary-ability-or-achievement Expect to pay $1000 dollars for a visa application and around $5000 for a visa lawyer to help you through the process. Visa’s are such a problem that there is a project designed to set up a cruise ship as an entreprenurial hub in international waters off the coast of San Francisco http://blueseed.com/.

Another option for accessing Californian resources is to set up an American company. While I was in San Francisco Carrie Walsh, an executive at Silicon Valley Bank, talked me through the process. It's easiest to set up a company in Delaware, to do this you will need:

  • To register for an EIN (Empolyer Identification Number) http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-%28EIN%29-Online

  • A fixed US office address

  • A business bank account

Having a US based company makes it more likely for a company to gain US investment, and makes their image more credible if targeting a US market.

The second big problem with Silicon Valley is a financial one. The cost of living is astronomical, rent alone eats up the majority of most people's monthly pay cheques. Engineers and developers are in high demand in California, so if you want to build a start up a team you will need to pay salaries of over $100,000 per year to entice talented individuals away from big corporates. The huge cost of setting up in California is probably the only parallel to London, which is also a brutally expensive place to set up a businesses.

I would encourage ambitious entrepreneurs to think outside the box when looking for the most beneficial locations to start up. Top of my list would be Medellin Colombia, Lagos Nigeria and Karachi Pakistan. These are all innovative cities, positioned in continents that have rapidly growing populations and massive increases in internet adoption. I expect that in the next 10 years we will see astronomical growth in technology businesses servicing South America, Africa and Asia.

Most importantly £50,000 in any of these cities will be enough to set up a new project where as in San Francisco or London £50,000 probably won't even get a business idea to the minimal viable product stage!

#business

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