"Why The UK Startup Scene Is Doomed" - someone's blog

<center><a href="http://zachinglis.com/2011/why-the-uk-startup-scene-is-doomed/" target=_blank><b>Zach Inglis - Why The UK Startup Scene Is Doomed</b></a></center>

<lj-cut text="Text of the blog post behind here>Background
A year ago I was talking a lot about my startup, the processes and the issues I encountered so others may learn. However, you may have noticed that my talk then went dead. I was entangled in the web of bureaucracies with the bank.

The process for receiving payments on a website (other than services like Paypal, which we all know is not a good idea) goes as so:

1.Register a business (Ltd, LLC, etc)
2.Open a Business Bank Account
3.Open a Business Merchant Account
4.Sign Up For A Payment Gateway
5.Sign Up For A Billing System (if 4 doesn't include)
6.Implement the billing system into your application.
7.Profit!
I was stuck on step number 3. I had a Ltd company that I was giving license to use my idea. (I kept this separate from my other businesses if I wanted to ever invest more in it.) I had a business account (in fact I had one set up in less than a week.) But the Merchant Account is where I was having trouble.

My 2 bank options were Barclays or Lloyds TSB.

I first chose Barclays. They somehow lost my paperwork and so I decided that Lloyds would hopefully be less problematic.

I already had a business account with Lloyds so next I needed to apply for a Merchant Account (3) with them. Not as simple as you would think so I decided to enlist the services of my father (a Chartered Accountant and long time business account holder with Lloyds.) After jumping through some hoops they came to me with an offer that I could use their service if I give a deposit. This is a commonplace technique and I was aware this would be the case. However, they asked me to put a deposit of £50,000 ($81,000.) I kid you not. I had already put decent money into building the business but I had no where near that to put as a deposit. With some further negotiation, they said they would halve it. I grumbled but it was the only way I knew how to further the business and not see my initial money go to waste so I accepted.

After months more of email tennis, unprofessional letters (Most of my letters from them contain my name and business name spelt in random variations) they told me that they had some 'suggestions' for my website. At first these were to update the Terms of Service and Privacy Policy. Most were reasonable although some just didn't make any sense or fit into my business model at all but I figured this was acceptable until they then started telling me I had to change the content on the front page. Items that were of no concern to the banking. (Even though, I was paying them a large deposit to protect them). I was getting web design advice (read: do it our way or forgo our help) from bankers. It was time to look into other options.

Resolution
Since it was my idea licensed to a company I have the ability to license globally without issues. So I decided that the best place I know for launching a product quickly is America.

I Tweeted out that I was trying to sign up for Citibank but I had no social security number. Within a few days I was phoned up by an Assistant Vice President Business Banker who was going through me with the steps to launch my business with them.

She was (and continues to be) absolutely amazing help. I am currently waiting to hear back about the Merchant account and it looks to be completing any day now. (Then I sign up for a Payment Gateway.)

I've almost launched a business in America without a Social Security Number, without an American address or phone number and without once stepping foot on American soil. And with only a £3100 ($5000) deposit.

No wonder you have places like San Francisco, filling over the brim with innovatives when banks do everything they can to put up road blocks. Making the experience frustrating is a sure fire way to make people repeat it less. You just simply don't see the level of entrepreneurs in the UK as you do the US in my experience and I feel that is not helped with the bureaucracies.</lj-cut>

Startup Britain, doomed from the beginning because we have coded failure into business enterprise from the DNA on up.

Highly informative.