This week, veteran investor Neil Woodford told the BBC that the UK has been “appallingly bad” at supporting small tech start-ups in the long term. But are we as bad as he says?
Issues levelling up
Woodford explains to the BBC: “The limited number of success stories we’ve had here in the UK have generally sold out too early.” Woodford believes that this is a problem of capital. While successful start-ups in the UK can reach a market value worth hundreds of millions of dollars, they are then under pressure to sell out. “That’s principally because of the time constraints on the capital that institutions have been able to provide to those businesses,” he adds.
According to the BBC, he is not alone in his criticism. Rohan Silva, a technology entrepreneur and former adviser to David Cameron during his premiership, is quoted explaining the two types of funding needed for successful start-ups. He says that the UK is actually very good at supporting early investment. “There’s the funding that comes from friends, family and fools: the start-up money – £50,000, £100,000 – to get going. There we’ve really made a big difference in the UK. We’ve created the world’s most generous tax breaks for that kind of investment.”
However, when it comes to ‘scale-up cash’ to help companies reach the next level, he says the UK falls behind many nations, especially the US.
“There is a big role for government in providing a bunch of that funding, particularly when it comes to research in the laboratory and helping that go to market,” he says.
BBC article
A question of capability
CityAM, meanwhile, asked whether the UK is even capable of producing the first trillion-dollar business in a head-to-head piece.
YesLuke Hakes, Investment Director at Octopus Ventures, argues that the UK has as good a chance as anywhere. While he agrees there are challenges, he says: “The UK has both world-class talent and technology and, as long as we encourage the ecosystem to thrive, there is every chance that trillion-dollar business will be ours.”
NoBut Alex Wood, founder and Editor of
The Memo, says producing a trillion-dollar business in the UK is neither achievable nor desirable. “Our economy isn’t dominated by corporate giants in glass skyscrapers – these are, in fact, the 1%,” he says. “We’re a country of small businesses, generating over £1tn in real revenues every year. Why not offer more support to the 99% instead? Nobody wants to hold back progress. But right now trillion-dollar companies are as fictional as unicorns, so let’s stop chasing them.”
CityAM article
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