Silicon Roundabout, the still-gritty tech cluster in East London, is bustling with fast-growing startups. Investors from both sides of the Atlantic are paying attention.

But it wasn’t a foregone conclusion. Back in 2010, the U.K. government launched an initiative to turn East London into a “Tech City.” Many locals were skeptical. London’s startup scene has traditionally been quite cliquey (a complaint we’ve heard from U.K. entrepreneurs who emigrated to Silicon Valley). It’s a bit of an “old boys club,” according to some entrepreneurs. A recent Forbes report argues that politicians have given this new tech focus a glossy, progressive-seeming veneer, but they haven’t done enough to educate the public about how to actually start new businesses.

That said, startups continue to be a hot topic in the press, and technology jobs are on the rise. During a recent trip to East London, I caught up with two of the city’s most active seed firms, Passion Capital and Index Ventures.

Eileen Burbidge, one of a trio of investors at Passion Capital, told me over lunch that early-stage investment opportunities have increased in the past two years. Here are the startups that investors predict could break through in 2014. We also narrowed some these companies based on suggestions from an extensive Twitter search. Note: Some of the startups that made the cut are Passion and Index portfolio companies.

The next huge exit: TransferWise

TransferWise cofounders  Taavet Hinrikus and Kristo Käärmann

Above: Taavet Hinrikus and Kristo Käärmann

Image Credit: TransferWise

By all accounts, TransferWise is absolutely crushing it in Europe. The company is on a mission to enable its customers to send money abroad more affordably. We first heard about TransferWise in the U.S. when the startup secured funding from libertarian billionaire Peter Thiel last May. Since then, it transferred £250m ($412 million) in funds, up from £125m ($201 million). According to a news release shared with VentureBeat in October, the startup is growing its revenues up to 30 percent month over month.

How does it work? TransferWise has made no secret of its ambition to cut out banks. (“BYE-BYE banks,” the website’s homepage taunts.) It all started when the founders worked out a proprietary algorithm to connect people who needed to send money internationally. It works by matching an exchange, such as Euros to British pounds, with others who want to turn pounds into Euros. “Banking needs to be democratized in the way that low-cost airlines did 20 years ago in aviation or Skype did 10 years ago in telecoms,” said cofounder Taavet Hinrikus in a recent interview with VentureBeat.

What’s cool about it? Hinrikus is one of the first 10 employees of Skype. He has plenty of experience building a successful startup. According to London-based sources, it’s a strong IPO candidate, which is poised for rapid growth in 2014.

Funding: Index Ventures, SeedCamp, SV Angel, IA Ventures, Kima Ventures

The under-the-radar choice: Thread founder Kieran O'Neill

Above: founder Kieran O’Neill

Image Credit: Twitter

Thread is one of a growing number of online services for busy professionals who don’t have time to shop. Sign up via Facebook and you’ll receive suggestions from stylists. Unlike the majority of e-commerce startups, it’s primarily geared for men.

How does it work? The startup blends man and machine. Customers will receive personalized information from human stylists and suggestions from a Netflix-style algorithm that learns your tastes over time. Bermuda-born cofounder Kieran O’Neill predicted in a recent interview that one stylist will work with every 10,000 clients. The stylists are high profile; according to GQ, Gwyneth Paltrow’s stylist, Elizabeth Saltzman, is taking part in the project. Note that consumers in the U.S. can’t sign up yet, although you can join the waiting list.

What’s cool about it? O’Neill is a serial entrepreneur who launched his first startup — a pre-YouTube video-sharing service — at the age of 15. The company recently participated in Silicon Valley accelerator Y Combinator, but O’Neill opted to return to London to continue building the product. Expect a launch in the U.S. in the near future.

Funding: Y Combinator

The next big enterprise startup: RolePoint

The RolePoint team

Above: The RolePoint team

Image Credit: Enternship

European techies are keeping a close eye on London-based RolePoint, an early-stage social recruiting software startup. Its angel investors are a top-notch group, including influential Russian investor Yuri Milner and Innovation Endeavors, the firm founded by Google executive chairman Eric Schmidt.

How does it work? The technology matches relevant roles with potential candidates in the social networks of current employees. In its first month of alpha testing, Rolepoint claims to have tripled the employee referrals for open positions and filled 78 percent of the positions posted. Companies saved an estimated $250,000 in recruiters’ fees.

What’s cool about it? This is well-designed business software that is easy to use. Most tools for employees are bulky, nonintuitive, and far too expensive. Passion Capital’s Burbidge predicts that it will cross the pond and become a hot enterprise startup in Silicon Valley in the next year or two.

Funding: Yuri Milner, AngelPad, Innovation Endeavors, SG VC, Transmedia Capital

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