I was listening to a radio program (In Business) about how PayPal started. Back in 1998 there was a very clever Ukrainian student trying to create a payment gateway between two Palm Pilots using infrared. You can read some of it here.
The really interesting point for me was how the investors were a bunch of tech entrepreneurs who had made about $250m dollars between them and were using ~10% of their wealth to fund tech start-ups. They kept flipping money to the young PayPal hackers, with a “wait and see what happens” approach. In the end PayPal’s “plan A” became “plan B” which was payments over the internet and as they say the rest is history.
Next I had a conversation with someone who works in The City. He knows people who have made £100m from running trading desks for big banks. There is a lot of this kind of money around in the UK. This guy has a totally different outlook on investing. He made his money from aggressive trading, which means competition and beating the other guy. Will this investor be as patient as the PayPal investors ?
I think not.
In other words, re-directing UK plc from dependence on the financial industry may have a disproportionately beneficial effect on technology start-up investment.
Update: Not all Angels from the City are the same it has to be said. Having just read Taming the Lion by Richard Farleigh of Dragon’s Den fame.
