money Startups: Follow The MoneyEditor’s Note: In part two of a two-part guest post, David M Blumenstein of New York’s The Hatchery discusses his experiences of how UK Internet startups differ from those in the US.

His advice could well be useful to startups worldwide. This time, why you may have to travel to find the perfect investment partner.

In early 2009 a noted European serial entrepreneur-turned-investor spoke before a group in London and proclaimed “If you are in the UK and/or EU, are a startup and are looking for investment, you should turn to the United States and focus all your energies there, because the active investors – the early stage ones – are there.”

I emailed the person who made this remark, just to make sure that this was not being said for effect and I was assured that this was how the person honestly felt about the situation.

Why look to America for investment?

I remember in 2008, I walked into a British investors’ office with a bona fide startup. It was shocking to me as the investor knew of the product, used the product and I made it quite clear that the startup was looking for investment and was located in the investment firm’s backyard. There was this reticence to investing by the firm and I never got an explanation. A scant few months later the startup received its first round of funding in the States, and recently a second round as well.

A few of the early stage investors I met with over in London who focus on technology and the Internet confided in me that their experience and knowledge of these areas was limited and that they relied on 3rd party experts. This became apparent as I sat down to explain some of the projects they were introducing to me. Now, to be fair, this situation is not limited to London or the United Kingdom – it’s a global dilemma.

The UK and EU markets taken together are sizable, but consist of so many countries and cultures that there must be varied approaches to marketing, sales and customer acquisition. Thus the United States becomes all the more attractive to British and European entrepreneurs looking for investment and market expansion.

Don’t rely on the government

There exists a strong belief on the part of UK startups that their Government and its offices can play a defining role in their success.

The Hatchery has done two UK Trade & Investment Gauntlet events in New York City and has had the opportunity to survey a host of startups and emerging companies all extremely keen about garnering US interest and investment. UKTI also sponsors Digital Mission events in Silicon Valley, Austin, Texas (SXSW) and New York City where around twenty startups at a time come over in order to attract investment and lay the foundation for market expansion.

While the public sector may very well be of assistance they should not be relied upon. At the end of the day the success or failure will be with the team and not elected officials. Government offices may be able to assist with market research, business development and landing services, but it is far more important that such entities be viewed as complementary resources and not necessities.

I want to see startups and entrepreneurs from all over the world succeed. I point out the differences, cultural and operational, not to isolate and segregate but rather to bring the point home that being aware of such differences and dealing with them head on can make the journey to entrepreneurial success more straightforward, rewarding and successful.

David Blummenstein is Managing Partner and Founder of The Hatchery. You can read the first part of this post, ‘Startups: Get Pitching, Ditch The Bitching’ here.

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