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London 2.0

Is London the new Silicon Valley?

Five years after he co-founded online ticket reseller StubHub Inc. in San Francisco in 2000, Eric Baker wanted to bring the same business model to Europe. He decided to base his startup in London. "If you're going to service that market," he reasons, "you have to be a local business."

Baker, 34, who has grown London-based Viagogo to more than 30 employees in two years, turned out to be on the leading edge of an emerging entrepreneurial boom in the British capital. Ever since eBay purchased European internet telephony pioneer Skype in 2005 for $2.6 billion, interest and activity among web startups in the area has been on the rise. At about the same time as Skype's purchase, the web itself was becoming more global, notes Saul Klein, a former Skype executive who recently joined VC firm Index Ventures in London. Today, there are more internet users outside the U.S. than in it, he says, and use of the internet is growing faster out-side North America. "You no longer have to be in the U.S. to build a significant internet business," says Klein, whose firm has investments in London-based music recommendation site Last.fm as well as Viagogo.

A cosmopolitan city with a rich pool of technical talent, sophisticated and robust investment capability, and vast European Union labor and consumer markets, London is a natural place to take an internet startup global, Baker believes. He also cites the city's multilingual businesspeople experienced at working in multiple cultures. "It's becoming increasingly important to think globally and have a work force that can do that," he says. "Few cities in the world offer a more diverse work force than London."

Baker's experience in London has been positive so far. Viagogo has sold millions of dollars' worth of tickets and signed deals to resell tickets for some marquee sports clubs. "It's still not Silicon Valley," Baker says of his new business base, "but it's beginning to build a very formidable infrastructure."

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This article was originally published in the July 2007 print edition of Entrepreneur with the headline: London 2.0.

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