A couple of weeks ago I gave a series of talks at MIT, Harvard and General Assembly on the startup scene in the UK and London in particular. I spoke alongside Nick Hungerford, founder and CEO of Nutmeg, and David Hughson, the Tech City specialist at the British Consulate in Boston.

Nick is a Brit but had been doing an MBA at Stanford when he started dreaming about developing an online portfolio building and management tool. Logic would suggest that Nick should base his business in Silicon Valley. He’d received encouragement from no less than Eric Schmidt as well as numerous offers of funding and support. His co-founders were also there. But Nick decided to re-relocate home to get Nutmeg going so, in many ways, is the perfect case study.

Our audiences were pretty diverse – academics, entrepreneurs, MBA students and advisors. All very smart and ambitious, so we had to tell a clear and credible story and be ready to handle some insightful – and possibly incisive – questions. I’d like to run through some of my key points.

1. Introducing the European startup ecosystem

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Europe is the biggest single market in the world, with free movement of goods and labour between member states. It also has an ideal time-zone, smack between the US and Asia. It’s host to several startup hubs – London and Cambridge in the UK, Berlin, Paris, Stockholm, Helsinki and Prague to name a few – and to several networks helping to join up the EU startup scene, including E-Unlimited, White Bull, Seedcamp and Tech Tour.

Of course Europe also faces challenges: principally that it’s a fragmented market with two dozen or more main languages, equally diverse tax regimes and general business and regulatory environments. But despite this (and on top of recession), Europe has been extremely successful in turning out world-beating tech startups, with Skype, Spotify, Shazam, Rovio and Mind Candy among the most famous.

2. Some startup clusters

Leading tech startups from Paris include flash sales outfit Vente Prive, dating site Meetic, Price Minister (ecommerce) and consumer healthcare specialists Withings. Paris is also host to several key startup events, accelerators and funds including Le Web, Le Camping and ISAI. One of their challenges, however, is that France has a very large domestic market, so French entrepreneurs often don’t have a global outlook. At the same time, culturally and politically France is anything but nurturing of its entrepreneurs. This might explain why London is the 6th largest French city!

Stockholm gave birth to Spotify, SoundCloud and one of the co-founders of Skype, Niklas Zennstrom although interestingly, none of the companies are based in Sweden. Online TV company Video Plaza is another one to watch and early stage investors Northzone Ventures and Creandum are based in Stockholm.

Finland is of course famous for one of the world’s biggest tech brands, Nokia. Its decline, as well as good government support, have given rise to several great Helsinki-based startups such as games companies Rovio, Grey Area and Applifier, accelerator Startup Sauna and the Arctic 15 startup conference. Swedish and Finnish companies tend to have a global outlook from the start as their domestic markets are so limited.

A personal favourite is Prague. I’ve worked with the guys at Node 5, a very cool co-working space and both Simon and I are mentors on the Startup Yard accelerator. (For a brief report on TH’s recent mentoring trip to Prague, take a look at this post on our tumblr.) Companies to watch include Brand Embassy, WebExpo is their big tech event and Wayra has set up an academy there – a clear indication of the City’s up-and-coming hub status.

Other very noteworthy European events include How to Web in Bucharest, Mobile World Congress in Barcelona, The Next Web in Amsterdam, Webbit in Istanbul and Web Summit in Dublin.

3. Something is definitely happening in Berlin!

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I think Berlin* is an especially exciting city at the moment. I first visited 2.5 years ago and the change in that time is palpable. Originally hailing from Sweden, SoundCloud is the poster child of the Berlin startup scene – and this week announced a revamp as its user base hit a staggering 180 million, or 8% of the internet population. They moved to Berlin to take advantage of the large talent pool of young engineers and creatives and of course plenty of relatively cheap post-industrial space in which to stick a team.

There’s also games company Wooga and e-commerce site Fab have located their European HQ in Berlin. Early stage investors include Team Europe and Early Bird Ventures. The Europas awards have just moved to Berlin and the vast plethora of tech events include Tech Open Air, Berlin Web Week, and Next Berlin. Both General Assembly and Wayra have set up there.

SoundCloud have their sales and marketing in London and investment came from London-based Doughty-Hanson. Our friends at Archify are funded by UK firm Balderton. It seems Berlin is a challenging place to raise funding unless you’re doing a clone of a successful US business model or an e-commerce play (Germany is a big e-commerce market).

4. And so to the UK

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Arguably the most successful tech cluster in the UK is Cambridge**. I couldn’t visit Cambridge Massachusetts without mentioning that Cambridge University is (also arguably) the best in the world and has a long history of spin outs including Harvard University itself in 1636! More recently ARM, Autonomy (worth every penny!) and Blinkbox. ARM provides the chips for most iOS devices and makes more money from chips than Intel.

The 1,500 tech companies in Cambridge employed 54,000 people and generated sales of over $20bn in 2011. It’s home to 12 $billion companies in total. There are also some very lively networks and events including Cambridge Angels, Cambridge Network, Cambridge Wireless, SVC2UK and Springboard. The Cambridge Cluster Map gives a really good sense of what’s going on in Cambridge and how the companies are interconnected. It’s worth noting as well that Cambridge is just 45 minutes by train from London.

5. The 800-pound gorilla

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But by any measure, London is very much the startup capital of Europe. London consists of several hubs: Soho has been a world-leading TV and movie post-production centre for years; the City is of course one of the oldest financial centres in the world; and the so-called TV triangle on the city’s western fringes is home to some of the most famous broadcasting brands, including the BBC, BSkyB, Discovery, Virgin, Endemol, Red Bee and Disney.

And then there’s Tech City, or if you prefer, Silicon Roundabout – the relatively new tech startup scene in London’s East End. I say “relatively new” advisedly as there has been a handful of tech companies in the area since before the tech bubble of the late 90s. But the growth in the last few years has been truly phenomenal. The area has plentiful former industrial property that seems de rigeur for startups, and while London is of course an expensive city, this area is (that word again) relatively cheap. It’s retained much of the Bohemian character that reaches back to the colonization of then-dilapidated Huguenot housing in Spitalfields by artists in the 60s and 70s, but the last half-decade has seen a pretty radical facelift occur, and for a while it seemed that every week saw a new bar, restaurant or gallery open. And of course, alongside the startups, the big guns have moved in, with Google, Amazon, AirBnB, Intel, Cisco and Ebay among them. It’s a heady mix.

Widening out from Tech City then, a few points about London in general. The city is the largest market in the world for media and entertainment; ditto financial services. It’s home to the largest VC community in Europe, with most VC investments in Europe actually made in UK companies. And the city is remarkably cosmopolitan, with about 300 languages spoken; it’s an ideal city from which to internationalise your company. And while not perfect, our government is listening, and improving the environment for startups.

6. Show me the money

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Atomico, who specialise in mobile and telecoms, have invested in Quipper (mobile quizzes), Rovio (think Angry Birds), Fon (the free wifi people) and Last.fm (streaming music and recommendations).

Passion Capital, who “invest in ambitious entrepreneurs who have global ambition for their early stage digital media and technology startups”, have stakes in Duedil (a quite brilliant due diligence service based on Companies House data) and Smarkets (a betting exchange).

DFJ Esprit have invested in StrikeAd (mobile ad delivery), Conversocial (social CRM), LoveFilm (which I think needs no introduction!) and Lyst (a slick women’s clothing e-commerce site).

Connect Ventures, a new fund, have invested in Ondango (a platform for integrating a shop into your Facebook page), Space Ape Games and Secret Sales (discount designer goods online).

DN Capital have funded Shazam (media discovery) and Mobile Roadie (an app creation tool).

One of Europe’s oldest private equity firms, Doughty Hanson has invested in SoundCloud and Handmade Mobile (a platform for monetising social media).

And Balderton Capital have funded Wonga (personal loans), Natural Motion (games tech), Memrise, (game-based learning – and brilliant imho), Betfair, Archify (for organising and archiving all your online activity) and scvngr (“a game all about going places, doing challenges”).

7. London movers and shakers

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For commentary, news and general maven-ing, I suggested following @mikebutcher, @brisbourne, @techcityuk, @TCEurope, @WiredUK, @robinwauters and of course @guardiantech.

There are several accelerators around the UK to watch, including Springboard, Healthbox, Oxygen, Wayra, BBC Worldwide Labs, Seedcamp and Level 39 (starting in mid-January).

London is host to several co-working spaces, with new ones popping up all the time. Among the best known now are TechHub, The Trampery, Google Campus, The Hub and White Bear Yard.

And among the many tech events in the UK are Le Web, London Web Summit, Silicon Milk Roundabout, Seedcamp Week, Internet Week, Noah, Digital Shoreditch, Wired UK and the wonderfully-named Silicon Drinkabout.

Sarah

* For more on the Berlin startup scene, see Simon’s recent post.

** And for more on Cambridge, see Simon’s report from Silicon Valley Comes to the UK.