Tech startups have been the British economic success story of the past decade. You can measure this success by the obvious metrics, like our stunning VC investment figures, or the less obvious ones, like the fact that more and more young, ambitious people are being drawn to work in startups or to build their own. But whichever way you cut it, the trend line is clear: the UK’s tech community, just a footnote a decade ago, is now at the heart of the British economy.
That’s why Coadec and The Entrepreneurs Network are joining forces today to urge the new prime minister to turbocharge tech growth – and we’re setting out the policies that it will take to do it.
“For both the tech ecosystem and the rest of the British economy, there are storm clouds on the horizon”
Government backing for startups will matter now more than ever. For both the tech ecosystem and the rest of the British economy, there are storm clouds on the horizon. For the startups, there’s a funding crisis with investment drying up and valuations being slashed. For the UK as a whole, there’s a cost-of-living crisis and an uncertain growth path for years to come.
The next prime minister will have to face up to these challenges. By supporting the UK’s great entrepreneurs and startups, the new prime minister wouldn’t just be backing our tech ecosystem, but our country’s economic prospects too.
We need to tackle the big issues tech startups face head on: access to capital, an inability to attract the best talent, cumbersome regulations and policies that get in the way of innovation.
On access to finance, we need to keep capital flowing from individuals and unlock new sources, like the UK’s pension funds. The new prime minister should end the uncertainty and commit to making permanent our world-leading incentive schemes: the Enterprise Investment Scheme and Venture Capital Trusts.
The new prime minister should also unleash institutional funding into startups by reforming the charge cap on annual fees, which means pension funds are blocked from allocating any portfolio into more innovative opportunities. Pension funds contribute 65% of the capital in the US VC market – in the UK it is just 12%. We even trail Europe. It’s a miracle we’ve built such an impressive ecosystem without pension funds being allowed to invest – imagine what we could build with their support.
“With 64,000 tech vacancies alone in the third quarter of 2021, the system still isn’t working for tech startups”
The Government knows the importance of talent. That’s why they’ve recently announced three new visas designed in an effort to attract the best and brightest. But, with 64,000 tech vacancies alone in the third quarter of 2021, the system still isn’t working for tech startups.
Among other things, the report calls for the expansion of the Youth Mobility Visa to include the United States, the extension of the High Potential Individual Visa based on a metric that includes, among others, India’s prestigious Institutes of Technology. After all, their alumni are now leading America’s, and therefore the world’s, biggest tech companies.
Poorly designed regulation is increasingly becoming a challenge for startups, putting them at a competitive disadvantage compared to the big tech companies and their startup competitors overseas. Manifesto recommendations include dealing with issues that would be caused by the proposed online safety regime, modernising employment law and ensuring AI regulation doesn’t hold back the development of the technology, but it also calls for more of the same in one area: the consistent and stout defence of the value of digital free trade, including its expansion via measures such as the Singapore Digital Economy Agreement.
This matters when across the world we’re seeing a wave of digital protectionism, often couched in the language of ‘digital sovereignty’. Whether it’s in Europe via the French Cloud Doctrine, or new digital localisation requirements in emerging economies such as Nigeria and Vietnam, a leading global tech market leader such as the UK has much to lose in exports from a swing towards more closed digital markets.
Our manifesto sets out these and more ways we believe the next prime minister can tackle these lofty challenges. These aren’t exhaustive, but they are critical.
The new prime minister should, and we hope will, do everything in their power to support them.
Originally published by capx.com and reprinted here with permission.
