UK Tech Sector Concerned Over Government’s Lack of Support for Start-ups and Scaling-up Companies #
The UK tech sector is worried that the government’s lack of support for start-ups and scaling-up companies could see London lose its position as a European tech hub. Although London has a dominant position in terms of the number of tech companies and unicorns, investors and founders fear that the UK capital could lose its edge, as other cities across Europe, such as Paris and Milan, are catching up. Concerns have been raised over government plans to scale back R&D tax credit support, as well as funding gaps that exist for companies when they reach a certain size.
The demise of Tech Nation, a once vital industry body for nurturing British start-ups, has left the UK tech sector in shock. The government withdrew its funding, instead opting to hand grant money to Barclays bank after a competitive tender, leaving many entrepreneurs who had passed through its programmes feeling that the move was out of keeping with the stated ambitions of Downing Street. The government’s warm words over the importance of tech from chancellor Jeremy Hunt are not being backed by policies and financial incentives, according to founders. This is concerning as they face post-Brexit challenges over staffing and EU market access.
London’s current standing as a European tech hub is evident in the FT1000 ranking, which shows that it is home to almost a tenth of the region’s fastest-growing companies and more than twice as many as its nearest rival, Paris. However, the UK itself trails behind Italy and Germany in terms of numbers of fast-growing companies, emphasising the importance of the capital to the country’s tech sector.
Investors and founders are worried about sustaining companies at the latter stage of their growth when they are seeking to list on public markets. They are concerned that the UK lacks a deep understanding of tech, and there is not as much analyst or investor support as in the US, making the UK public market less attractive than that of the US when tech companies seek to list. It shifts the centre of gravity from the EU to the US, and it’s the missing piece of the jigsaw.
Brexit also remains an issue, with entrepreneurs raising worries over their ability to attract talented staff from the EU, despite a tech visa scheme that had been overseen by Tech Nation. They question who will take on this responsibility.
Not everyone is pessimistic, though. Many regard the UK’s exit from the bloc as a “slow puncture” rather than a “cliff edge” — although there are signs that business, people and assets are shifting out of London. Ministers are confident that they can use their ability to set laws and regulations outside of the EU as a chance to streamline onerous rules and free investment into tech. However, for many in the sector, the time has come for Westminster to deliver positive reforms to create an attractive offer and turn the Brexit headwind into a tailwind.