All this week Seedcamp, a UK-based internet startup accelerator, has been running its headline annual event Seedcamp Week in London.

As an accelerator, Seedcamp has mimicked a successful process established in the U.S. by Y Combinator, Techstars and others of taking early stage internet entrepreneurs and running them through an intense programme of mentoring and business development. Mentors are laid on from different disciplines and work with the entrepreneurs each day. They cover founders, product experts, venture capitalists, marketing specialists and more. The best ideas at the end of the programme get funding to get started. Seedcamp Week brings the best of the best from the Seedcamps throughout the year and around the world for a final London mentor and pitch feast.

Seedcamp has grown its fund to €5m this year and made some other announcements to bolster its success. There’s no doubt that a tie-up with Dave McClures’s 500 Startups will boost Seedcamp’s profile (disclosure: Dave McClure is also a Moonfruit investor).

But there are two questions that have plagued internet tech financing in recent months: Can Europe produce internet companies that rival their U.S. cousins in terms of success and influence? And are we in a tech bubble?

Let’s deal with Europe first. Seedcamp Week ends today – start-ups this time ranged from grabcad.com and farmeron.com, bringing the internet to engineers and farmers, to compilr.com and transferwise.com hoping to disrupt the software compiling and foreign exchange transfer markets respectively.

In my mind, for the UK to really produce world beaters with $1bn plus valuations, we need to have start-ups that play to our strengths. The UK and London in particular have strong industries in finance, design, music, and the marketing and creative industries. Some of these talent pools should help a great deal in the 2.0 world of slick UI and simplified design. NYC has done well to distinguish itself from the Valley based on a similar city profile to London, with companies like tumblr, foursquare and etsy.

Mint.com (started in 2006 in the US and acquired for $170m in 2009) was complemented for being a design-led site that happened to sell personal finance software. Wonga.com, which provides short term loans, is a UK champion in this ilk. It has similarly great, simplified design, is based in financial services, and with £73m revenues in 2010 and strong growth a high value IPO may be on the cards. Also in this vein is betfair.com, sourced from our national love of gambling, and zopa.com, providing peer-to-peer lending, sourced from the UK’s love of fairness and new found suspicion of banks. Successes like moo.com, last.fm and spotify.com show the influence of the design and music industries.

And now to the bubble. There’s been a lot of talk of tech bubbles, Angel bubbles and accelerator bubbles. Marc Andreessen says we’re not in a bubble and public tech multiples are too low, while Steve Blank says we are in a bubble, particularly at the Angel end which is playing out “by the book”.

The first Internet bubble took a long time to build, from the Netscape IPO in 1995 to the Nasdaq peak in March 2000 and subsequent crash. The U.S. was buzzing for a few years before the money, buzz and funding started to flow and build in Europe. New players piled in and more money chased fewer opportunities. Investors went further afield to chase them.

Moonfruit and I lived through that crash. We took VC funding in January 2000, and launched our business. We had no idea how close to the crash we were, and I don’t think we appreciated how long the boom had already been going when we joined the party. We have a post-crash happy ending, but this is not common. More and more of the U.S. VCs closed their European funds after the crash and many have not come back.

So what does that mean for Seedcamp and 500 Startups? Is this tie-up a sign that Europe is heating up? Is too much money chasing too few opportunities in the Valley? Too many accelerators? Are we beginning the last hurrah? I hope not.

As Mike Butcher from Techcrunch said in a recent interview, Seedcamp’s example spawning more accelerators in Europe could be a case of “a rising tide lifting all boats”. But even if the tide goes out those funds will have been injected into the economy and we’ll be left with more experience and knowledge.

Legislation affecting your business can seem like one of those extra things you just shouldn’t have to worry about, but it is real and does matter. Some of it is a real pain, and some of it is a good discipline with real benefits.

The main kinds of legislation that affect the running of your business are:

• Employment law – the relationships between you and your employees, from payment rights to varying types of discrimination
• Consumer protection – to ensure that consumers are treated fairly by businesses, such as ensuring product quality is satisfactory.
• Tax and regulations – anything from payroll tax, VAT and coporation tax, to filing accounts and statutory documents.

It’s your responsibility in your business to make sure you adhere to all these things. But it doesn’t mean you have to do it yourself. My first advice would be to make sure you have an accountant who is looking out for the day to day stuff, particularly around payroll and other taxes. The Inland Revenue isn’t particularly sympathetic to people paying incorrect tax, and a competent accountant will make sure you do.

On the legal and employment side of things, take advice when you need it. Treat people with respect and fairly and you’ll be OK in most cases. If you find yourself in a tricky situation, then take advice. There are several business services that will offer standard contracts and process documents (e.g. dismissal), so you can use these to save money. Barclays and RBS both have business software bundles that include legal and accounting software (as does Moonfruit), so they can be helpful here.

Most importantly, don’t be afraid to do something for fear of regulation or concern that it’s all too complicated. Seek to do things the right way and take advice if you’re unsure, but don’t get paralysed. Most government agencies want you to succeed and will work with you to help you comply, even if it’s tidying up after the event.

Some laws can even lead to a benefit for your business. Understanding that EU law requires us to give customers a 60 day right of refund for digital purchases has allowed us to promote this effective 60 day money back guarantee to our customers – so it’s not all bad.

By Joe White

Delivering his second budget speech yesterday, Chancellor George Osborne revealed that he is leaving in place all of the austerity measures which will have a direct impact on the public sector. Meanwhile, there was a lot of policy aimed at supporting business and the private sector. The implicit assumption is that the private sector will take up the slack and continue to drive growth. This is the gamble, and we will have to wait and see if it works.

The government’s predictions for growth are down, and the reliance on the OBR forecasts could come back to haunt George if it starts to get worse and they continue to further revise down their independent estimates. Growth is the ultimate balancing factor for the public finances, so it is all important.

Simplification was a big part of this budget. Focusing on making the tax code easier to understand (43 tax reliefs abolished), and a potential merger of National Insurance and income tax will help. The calculation of payroll taxes is something that can only be done by a seasoned professional, so simplification matters and we can build on this.

Simplification also affects medium and longer term decisions to invest in the UK, as it makes a more attractive prospect for business. Flagging the 50 percent tax rate as temporary is also a nod in this direction to say, “stick around, it will get better”. Corporation tax is coming down for the same reason.

The increase in  R&D tax credits by 200 percent (rising to 225 percent) will help stimulate small business. This is linked to £100m further investment in new science facilities, funding of 12 new technical colleges and other initiatives like a reduction in times for clinical trials which will affect life science businesses. There will be further enterprise zones with tax benefits, but the welcome news is that there will be one in London, which as a major driver of UK growth is too often overlooked for additional support, particularly for start-ups and high tech businesses. A lot of this is longer term, but hopefully protects and develops the UK’s ability to build modern and high tech businesses.

For us as a business, the biggest benefit will be in the R&D tax credit, and in future the continuing reduction in corporation taxes, with the ongoing tax simplification being a good thing too. For our customers, 90 percent of which are small businesses who build and host their websites with us, the simplification of the tax code and the increase in personal allowances should reduce costs a bit and provide a bit more income. Other longer term business benefits around investment in skills and science should also help.

Whether this works is a big question. If we do get growth, how will the rewards be split? These are things that will be picked over in the days to come and analysed in the context of what actually happens in the coming years. This is a hopeful budget that is in keeping with the spirit of the non-banking private sector saving us from the state of our public finances. People like hope, but if it fails to deliver and growth continues to be revised downwards in months and years to come, people will soon feel that this hope has faded away.

Joe White is CEO of moonfruit.com. The opinions expressed are his own.

To encourage entrepreneurs and entrepreneurialism, you need to get entrepreneurs together. Shoreditch has already created an organic hub of very early stage companies who all cluster together because there’s an existing creative culture in the area, and there’s access to technical talent. What the government is proposing will not replicate this as it’s more of a corporate hub for established companies.

Even with names like Google and Facebook, which are undoubtedly incredible companies, the reality is that the people who will be at the park are essentially professional managers running the UK or EMEA operations. If you’re walking the halls or eating in the cafes in the Tech Park, you won’t be bumping into Mark Zuckerberg, Sergey Brin, or Larry Page. And that’s where the real value is.

The unique culture that Silicon Valley has is built on entrepreneurs meeting, sharing war stories, and inspiring each other. Being surrounded by professional managers, even if they are of a very high calibre, is not the same thing.

If the government wanted to build a new tech hub, the companies it should be urging to cluster together are some of the UK’s established entrepreneurial companies such as Moo, Betfair, Huddle, Wonga, and Moonfruit. That way, budding entrepreneurs can learn from these companies’ unique experience of founding and building a business in the UK.

Ultimately, building a thriving start-up culture is a bottom-up and not top-down process. If we want more global leaders, we need more seeds from which to pick winners. The Tech Park will support winners, but not necessarily create more of them by itself.

-Joe White is managing director of Moonfruit.com. The opinions expressed are his own. Join Reuters for a live discussion with guests as UK Chancellor George Osborne makes an emergency budget statement at 12:30 p.m. British time on Tuesday, June 22, 2010.-

The first Tory budget is a critical one. The Treasury and Chancellor George Osborne have been dropping hints for weeks about a big slash in public sector spending in an effort to try and prepare Whitehall for the worst, and to rally the private sector to step in and fill the deficit.

It’s a risky strategy. The belief that you can slash deficits and generate private sector growth is close to Tory hearts, and further encouraged by recent successes in this area by the Canadians.

But the difficulty is that when Canada implemented rapid deficit reduction, the wider global macro-economic climate was much more benign. One person’s spending is another person’s income, so reducing spending will reduce income unless other kinds of spending rise to fill the gap.

Economically there are only four kinds of spending, the total of which equals the national income: Consumer (you and I spending), Government (we all know about that one), Investment (generally spending by companies) and the net of Imports and Exports (net imports sends cash overseas, net exports increases domestic income).

Government spending is going to fall, that much is clear. Unless something else rises, national income will fall by definition.

Given that many different countries (particularly in Europe – who are our key trading partners) are planning to make similar cuts, the outlook for growth in our exports is slim as each country is reducing domestic spending.

We can’t all export ourselves out of this problem, someone has to be importing something. Consumer and corporate spending is also down considerably, and so there’s real concern about where the demand to fill the deficit created by reduced government spending is going to come from. The short and medium term in the UK could be very tough indeed.

However, I do agree that some reduction in public sector spending is necessary. The challenge is over what time frame. Public sector spending over the last ten years has gotten a little bit out of control as it has adopted some private sector pay principles on top of its already generous pension plans.

At the margin, this will have had an impact on  individual decisions to join the public sector rather than the private, as the benefits of the private sector were less clear and rewards were not so different. If the private sector is going to thrive, a better balance needs to be struck.

The big question, of course, is how to stimulate the private sector. The economic levers that it looks like the Tory government will be using are lower corporation tax, concessions on National Insurance, and exemptions for entrepreneurs within the new capital gains tax rules.

In the longer term, a focus on education and training will be a critical way to encourage bright new people into the economy to generate income.

It’s the short term which is toughest. In order to kick-start the private sector, we need to encourage a culture of starting and building businesses in the UK, particularly in high-growth technology.

Just one Google or Microsoft in the UK would do an enormous amount for the economy, and so encouraging entrepreneurs to build, and keep, their businesses in the UK is going to be absolutely critical for the Tory strategy to work.

It will most likely be the public sector which will feel most of the pain when Osborne stands forward, but it’s still going to be tough times ahead for everyone. It will be down to creative and driven entrepreneurs to help move the economy along.

Picture Credit: A row of piggy banks adorned with the colours of Britain’s Union Jack flag are displayed in a souvenir shop in London March 24, 2010. REUTERS/Darrin Zammit

After days of negotiation, we now (finally) can see the shape of the new UK government.

Dealing with the deficit will be top of the short term agenda for the government, but general economic reform must be part of the longer term plan for both the Conservatives and the LibDems.

Their main concern will be to find a new source of growth for the UK economy that isn’t so heavily reliant on the financial services industry, which has proven to be not as stable as once thought.

Encouraging the growth of new businesses, particularly in high-tech sectors, and drawing on the world class universities we have could be an effective way of creating sustained, long-term growth.

One of the primary mechanisms to encourage entrepreneurialism has always been taxation policy, particularly around capital gains tax.

One of the first pledges which came out of the coalition government was to increase the capital gains tax from 18 percent to nearly 40 percent, but it will be accompanied by additional relief for business assets and they’ve signalled support for some kind of entrepreneurial relief.

Entrepreneurs’ relief currently gives business founders a lifetime allowance of 2 million pounds of gains on business assets which are only taxed at an effective rate of 10pc. Entrepreneurs take risks to create companies, create jobs, create growth. This should be encouraged, and the signals from the new government show they recognise this and this makes me feel optimistic about its intention to support entrepreneurs.

The subject of business creation and entrepreneurial support also touches upon immigration policy, which is another hot topic in this debate. The anti-immigration arguments focus on immigrants taking jobs from native UK residents and putting strain on UK public services and housing.

However, immigration can not only be a source of skills, but also a source of entrepreneurs. This is a fact that the US has long recognised, and is looking to further support – many of its successful companies particularly in high tech, have been founded by immigrants.

In February, Senator John Kerry and Senator Richard Lugar introduced the Start-Up Visa Act in the U.S. Senate.

The bill would create a new category of visa that allows any foreign national who is able to raise at least $250,000 to move to the U.S.

They would become a permanent U.S. resident once the business created five jobs or achieved $1 million in revenue, or if they had managed to raise a further $1 million.

At the moment, we have some of the best universities in the world which attract some of the best students globally. What we don’t do well enough is to give those bright minds an incentive to stay. While the details of the Start-Up Visa Act may not appeal to policy makers here, the principle of it should.

In order to create new businesses and new jobs, we should be open minded about opening up our borders to foreign nationals with great minds and good business plans. They won’t be taking British jobs, but rather creating them.

Taxation and immigration policy are just two examples, but they illustrate the wider point. The new government should really focus on entrepreneurs as a growth engine for the economy and develop a holistic set of policies to encourage them to build businesses in the UK.
While I’m encouraged by the first indications from the government, I still think there’s room for more.

- Joe White is chief operating officer at gandi.net. The opinions expressed are his own. He will participate in a in a Reuters Budget live blog at noon GMT on Wednesday, March 24, 2010. Please tune in and join the discussion.-

With the general election just around the corner, chances are that this will be a very safe budget from Chancellor Alistair Darling.

He will want to defer as many unpleasant decisions until after the election, look responsible, and emphasise that Labour is the safest pair of hands for the economy.

And he’s in a better than expected position to do this. The overall amount of borrowing for this year has been revised down several times, and it could be as low as 170 billion pounds by the time of the budget speech.

While this is still a massive figure, it’s better than it could have been and means that he can afford to reduce some of the UK’s national debt with the savings (look responsible), and spend on a few very targeted programmes designed to stimulate the economy (appeal to voters).

These programmes will likely focus on issues that everyone can agree on so that they appeal to people beyond the core Labour heartland.

One of the most worrying impacts of the recession has been the growth in long-term unemployment, and particularly amongst the youth. No one likes young people on the streets, and so methods to get them into work will be a priority.

While this is all good stuff, I’m concerned that we aren’t doing enough to stimulate the industries which can have a sustained, positive impact on the economy.

During the nineties and noughties, we spent a lot of time and effort building the financial services industry in the UK, and relying on it has proved to be a poor choice. By contrast, the technology industry will be one of the largest growth industries worldwide, and we need to do more to stimulate it in the UK.

There are no Microsofts, Googles, or Facebooks founded and headquartered in the UK, and they contribute an extraordinary amount to the economy. And outside of the internet space, some elements of green tech and biotech also have massive growth potential.

So how can we do this? There are already tax credits for companies doing R&D, even if they are loss-making businesses (which investment backed early stage businesses often are), and this is definitely a move in the right direction. However, I’d like to see more done to encourage employers to bring young people into the technology industry.

One of the easiest ways to do this is to provide subsidies on payroll tax so that SMEs and corporates within the high-tech sector can employ more people. This will have the dual benefit of giving employers more resource to build the business, and more people will become skilled in the high-tech sector.

One way or another, we need to find a new growth engine for the UK economy and how Darling addresses this problem will be the core emphasis of his speech.