The writer is the founding father of sieveda media firm for European start-ups supported by FT
With the strongest firms being constructed within the hardest of occasions, the prospects for the UK expertise sector look brilliant. The financial system seems to be slipping rapidly into recession as inflation and rates of interest rise. Non-public market valuations for expertise firms at the moment are chasing public market share costs down. And the British Prime Minister by no means uttered a more true phrase than when he stated “fuck enterprise”.
By implementing a tough Brexit, Boris Johnson’s authorities was capable of impose sanctions by itself nation. Not solely has the UK pulled out of the world’s largest single market, it may now be locked out of the EU’s €95 billion scientific analysis program Horizon. As a number one technologist instructed a authorities minister at a Founders’ Discussion board occasion final week, Brexit has resulted within the greatest lack of sovereignty for the reason that Norman Conquest in 1066. The world is quickly merging into three technological blocs (the US, China and the EU). , Britain now stands in damp isolation.
However regardless of the return of more durable occasions, the temper finally week’s London Tech Week was defiantly optimistic. Given its efficiency over the previous decade, the sector must be optimistic. As a current Tech Nation report highlighted, the variety of startup unicorns value greater than $1 billion rose from 12 to 123 throughout that interval (though fairly a number of may lose their spiral horns within the current downturn). The variety of individuals employed within the tech sector rose from 2.2 million to nearly 5 million. A phrase cloud abstract of London Tech Week could have spawned the phrase: alternative in adversity.
For now, London stays the enterprise capital heart of Europe, regardless of being challenged by Paris. Britain’s ‘golden triangle’ of universities, comprising London, Oxford and Cambridge, is without doubt one of the world’s most vibrant suppose tanks. Large US tech firms have additionally doubled down within the UK, with Google’s ‘panorama scraper’ headquarters being constructed subsequent to London’s King’s Cross station, longer than The Shard is tall. “Britain has an important alternative. The expertise in science and expertise is extraordinary,” Kent Walker, Google’s president of worldwide affairs, instructed me on a current go to.
Some enterprise capitalists are even attempting to reinvent and rebrand Europe’s entrepreneurial geography for a post-Brexit world. Simply because the focus of entrepreneurial, educational, and monetary experience in Palo Alto, California, fueled the rise of Silicon Valley, London and Paris are two poles of a decentralized “New Palo Alto,” in keeping with Saul Klein, co-founder of the VC agency LocalGlobe. Its personal workplaces are near Google DeepMind, which it says employs 700 PhD researchers specializing in synthetic intelligence, the glittering Francis Crick Institute, which conducts biomedical analysis, and College Faculty London.
Hop on a practice (at the very least when it is operating) and attain a number of different tech hotspots inside 4 hours, together with Bristol, Manchester and Paris. You may additionally discover a thriving life sciences cluster round Leuven in Belgium and a deep tech cluster round Eindhoven within the Netherlands.
Seven of Europe’s high 10 most beneficial tech startups emerged from this New Palo Alto, in keeping with Dealroom. General, this European cluster ranks third on the earth when it comes to new enterprise worth created, after California and China.
However regardless of the strides the UK tech sector has remodeled the previous decade, it nonetheless has an extended technique to go. In keeping with Jonathan Haskel and Stian Westlake, authors of reboot of the longer term.
Over the previous 15 years, funding in intangible capital has grown at simply 2.3 per cent a yr within the UK in comparison with 4.4 per cent within the US, contributing to a large divergence in financial output. Take a contemporary firm like Apple, and its bodily property are solely 2 p.c of its market worth. However UK financiers stay swayed by the ‘tyranny of collateral’, preferring to lend towards tangible property reminiscent of buildings, plant and equipment, reasonably than investing in intangible property reminiscent of software program, model and design. “We’ve an 18th-century monetary sector that is not match for function,” concludes Westlake.
The solutions are to take a position extra in schooling, analysis and innovation, increase entry to VC-style enterprise capital, and regulate guidelines to favor fairness over debt financing. However that requires a significant shift within the collective mindset. Optimistically, tough occasions may set off this much-needed rethink.