The UK has an opportunity to become the next great tech-startup economy post-Brexit, but it needs the Government to do more first, argues Sebastien Kurzel.
The UK is blessed with a startup culture second only, in my view, to the US. On top of that we have energetic early stage investors such as Eileen Burbidge, founding partner of Passion Capital, Tom Chapman, co-founder of MatchesFashion, and Richard Reed, co-founder of Innocent Drinks and JamJar Investments.
But despite their best efforts, increasingly we’re seeing early stage investment falling year on year, leaving those with a hunger to innovate floundering without the backing they need to grow successfully.
Brexit could give us the kick we need to focus on our startup culture and create the prosperous and successful future we deserve outside of the EU. But even more, it could give the government the incentive it needs to stop seeing investment and nurturing of young, innovative businesses as someone else’s challenge.
We know that Britain has startup talent because we already lead the world in the area of fintech. To put that in perspective, Starling Bank recently secured another huge investment of £50 million, on top of another £25 million from iconic investor Harald McPike. Fintech is a UK success story and is currently worth £6.6 billion to our economy.
But there is a role for government to play here when it comes to creating new success stories; one which up to now they have been slow or unwilling to take on. If they don’t start thinking as innovatively as our startups, we might all regret it post-Brexit.
It’s a huge understatement to say that the situation we’re in now, with less than two months to go until we leave the EU, is bad for business. But if we run things forward, at this time next year things could be much worse and we could be desperately in need of some good ideas to boost the economy, bring in new talent, increase the tax-take and attract inward investment.
One way to do this is to start to plan ways to develop the environment that creates startup ecosystems across the UK. Think of Silicon Valley and then dot it, multiple times, around the UK, not just in London or Manchester but in Newcastle, Hull, Bristol and Truro.
Silicon Valley didn’t just happen. It evolved because the Californian government encouraged what it recognised was the future. It listened to all the young entrepreneurs that knocked on its doors, welcomed the partnerships between universities and businesses and put in place the infrastructure, resources and programmes necessary to cultivate this new and growing phenomenon.
Many in government might say: ‘why bother? Startups land wherever they want to and there’s nothing we can do’. This is not true, and our lack of action is having a profound effect. Right now, London is sliding down the list of top destinations to start a business and being overtaken by places like Berlin and Stockholm.
Take Amsterdam, a city hot on our heels in the top 10 startup locations list. Money poured into Dutch tech companies in 2018, €750 million at the final count. And the city has become famous for its blockchain tech scene.
Again, just like with Silicon Valley, this is no accident. The Dutch government has gone out of its way to attract global talent making it easy to relocate to start a new business, but importantly it actively works with blockchain startup via a government programme. This centrally funded project drives forward new prototypes, pilot schemes and global collaboration. It puts the UK’s efforts to shame.
Five years ago, Amsterdam was not on anyone’s list of top startup destinations. Yes, it’s a great city with an outstanding lifestyle culture, but set against the UK there was no contest for founders. Today it is set to overtake London in the minds of young entrepreneurs worldwide as the place next door that’s better than the UK.
If Britain doesn’t want to end up at the bottom of this increasingly important list, the government must step in. Post-Brexit we’re going to need fresh ideas, new money and, if we’re going to make the most of our new place in the world, we’re going to need to be top of every business list out there. If the government acts now, there’s every chance we can be number one for a very long time to come.