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Huddle and Soundcloud - Europe's tech hopefuls

• Rory Cellan-Jones
• 9 Nov 09, 09:20 GMT

Can Europe compete with Silicon Valley when it comes to smart young web start-ups? When so much of the venture capital money is still based in Palo Alto and Mountain View, it's hard to start a business in Shoreditch or Stuttgart which can take on the world. But in the last week I've met two - Huddle and Soundcloud - which seem to stand a chance, both by offering fairly simple utilities in the internet "cloud".

Huddle

is a company based in south London providing office space to users all around the world. No, not a property company, because the offices used by Huddle's customers are in a web browser. The aim is to allow organisations large and small to have an online space, where staff and clients can share documents, calendars, even a virtual whiteboard. You sign up and are then presented with your first "workspace", described in the blurb as " a secure space that you can share with others and use to manage a project, team or client relationship." So then you can invite colleagues to join you in your online office, editing documents, scheduling meetings, and doing all those other tiresome but important tasks of the average office worker.

There is a free ad-supported service, but Huddle is really aiming at businesses which will pay between Β£10 and Β£125 a month for large amounts of online storage. Hold on a minute, though, isn't this tiny start-up lying in the middle of the road waiting to be crushed by the biggest name on the web? After all Google's suite of online applications - documents, spreadsheets and presentations - already fulfils a similar purpose, and Google Wave, if it is ever transformed into something vaguely usable, will take the online collaboration business to a whole new level. And they are both free.

Nevertheless, Huddle has managed to grow rapidly. Its commercial director Charlie Blake Thomas told me that its user base was doubling every four months, and the firm was expecting to be "extremely close" to breaking even in the first quarter of next year - though I think we've all learned to take such forecasts with a pinch of salt. Its customers range from the energy firm Centrica to local councils and government departments, so why are they opting to "huddle" when they could share Google docs for nothing? Mr Blake Thomas said his firm offered a more professional and stable service, citing as an example one local council:"They started by using Google Docs but once they'd got 70 or 80 people onboard it just didn't work for them, and they upgraded to Huddle." He also claimed that, unlike a number of Google services, Huddle was not subject to outages.

There's talk of a ground-breaking deal in the offing which will see a company which still has just 35 employees getting the chance to offer its products to thousands of potential customers. Working together in the cloud is a fashionable new trend with plenty of established American giants sniffing a new way to extract cash from customers - but there is just a possibility that a British minnow could steal the business from under their noses.

Soundcloud

By contrast, sharing music online is now a pretty mature business - or is it? I discovered Soundcloud a while back when I was trying to find somewhere that would host audio files in the same way that YouTube hosts your video. Nobody else was really making it easy to upload music or other forms of audio and then share it in a simple way which anyone could access.

The likes of MySpace are useful for new bands attempting to promote themselves, Spotify and Napster offer online access to music for fans, but Soundcloud aims to be a simple utility for the music industry, allowing artists, labels, A&R executives to store tracks online which they and their fans can access anywhere.

"It's Flickr for audio" is how the co-founder Alex Ljung described it when I caught up with him last week, making the point that, like the photo-sharing service, it's aimed mainly at creators rather than consumers. So here are a couple of examples. This is a by the band Them Crooked Vultures, which uses Soundcloud to distribute its music. The band also used to offer fans a preview of its new album, but Alex Ljung claims 20,000 fans listened on Soundcloud, compared to just 12,000 on MySpace.

And here is the I conducted with Alex, recorded on my phone and then uploaded to Soundcloud. Afterwards he explained that he'd been a sound designer in Stockholm when he and a friend Erik Whalforss came up with the idea for Soundcloud - and moved to Germany to make it happen. Now a team of 10 is running a business with over 350,000 customers, with offices in London as well as Berlin.

It is following the same "freemium" route as Huddle, with a limited free service, and then pro accounts at prices of as much as Β£45 a month allowing a record label to store unlimited amounts of music online. In the next week or so it will be releasing an iPhone app, allowing these pro customers - probably music label executives - to demo their tracks on the move, rather than handing out CDs as they do now.

So two smart web start-ups, both managing to survive and grow through the toughest recession in living memory. They've each received Β£2-3 million in venture capital funding, and have shown that you can do quite a lot these days with a clever idea and limited amounts of cash. Now comes the tough part - proving they can be profitable. Or, perhaps more realistically, finding a bigger firm to buy them and take them to the next level.