London is one of the top three cities in the world to find investment for an online media startup, reckons Saul Klein of the town’s renowned VC house Index Ventures, which has financed the likes of Last.fm, Joost and Skype. Klein, who remains an adviser to the eBay-owned VoIP outfit, told paidContent:UK London was up there with San Francisco and, in some respects, up there or possibly even ahead of Boston: “You don’t have to be a US company anymore to create a big business on the web.”

- Experience: Since the dot.com crash: “You now have second- and third-generation entrepreneurs, either who are now starting businesses again or investing in businesses. You have a lot of people who have worked for start-ups, which you just simply didn’t have the first time around. There’s certainly a lot of receptive investors now in London and I think there are a lot of people who are looking at what’s been going on over the last couple of years ... and saying ‘well I can do that.’”

- Investing: Klein said “the growth of west coast-style venture capital in London” has been important because funding is more sophisticated than it was in the late 90s. “Very few people wanted to back internet businesses - let alone consumer internet businesses at that stage - and Index and Benchmark were really the only two firms to remain faithful to the consumer internet. There is now a lot more money and there are a lot more ideas, but I don’t think that necessarily means that there are better quality ideas - it’s still very, very challenging for investors to find great ideas and a great team to back.”

- Skype: Although eBay (NSDQ: EBAY) this month effectively said it had overvalued Skype upon buying it for $2.6 billion in 2005, Klein counters: “They’re in a fortunate position. To have three of those brands - in Skype, eBay and PayPal - as part of your business, I think, is a great thing. It’s got one of the fastest revenue ramps of any company that I’ve ever heard of, given that it’s only two or three years old in terms of monetisation. It’s a long road ... but it’s a great asset to be an owner of. “

Much more on Europe vs America, Last.fm and the VC as social connector in the edited transcript here.

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