While various league tables and indices squarely place the UK high up in the rankings for its start-up culture and global reach, the UK government’s lack of support for start-ups was called out today at the CES tech show as a “source of embarrassment”. CES organiser Gary Shapiro said the UK government is nowhere near as supportive of its start-ups as France, the Netherlands and Israel. CES is usually the tech event of the year where global giants unveil their latest innovations long before they are even in the market. The industry event is fertile ground for start-ups to network with retailers, tech analysts and the media, which is crucial for start-ups looking to grow.
But considering the numerous trade mission and grants organised by the government over recent years, just how valid is Shapiro’s comment?
According to serial entrepreneur Christian Lane, recent news that Skyscanner has been sold to the Chinese travel firm, Ctrip, only reiterates the lack of support the UK offers start-ups, and while Chancellor Philip Hammond’s £400 million pledge for innovation is something, there is still a long way to go.
“The sale of Skyscanner has emphasised that UK businesses are left with little or no support from UK government. If and when a sales offer comes in it’s hard to say no as the risk of continuing to scale up vs selling out is just too high. Whist the £400 million pledged by Hammond does show willing it will be a case of watch and see to know if it will have any impact on businesses like ours,” Lane explains.
Lane became the youngest ever entrepreneur to receive investment on BBC’s Dragons Den at age 18. Since then, he has gone on to found Smarter, a British smart home technology company behind the first wi-fi connected kettle. As a tech innovator, pain points that remain unaddressed by the government include ways to bridge the skills shortage in the sector–an issue made more uncertain with the Brexit vote.
“The Brexit negotiations also have a massive impact on businesses like Smarter as without allowing free borders we risk losing tech companies to EU countries like France and Germany as the skills shortage in the UK is also difficult to contend with at the moment, let alone if we reduce access across borders. Hammond has in no way addressed the skills shortage in the statement and it is one of the most pressing matters to start-ups and scale-ups alike,” he says.
“In the case of Skyscanner and Arm it was just too risky to continue so when reasonable buyout offers come along they are usually snapped up. This takes the profit, jobs and technology out of the UK which inevitably reduced the economic growth in this country when we could be a thriving technology centre. This is not the same in other countries- you only have to look at places like Silicon Valley, South-East Asia and and Europe to see where the fantastic breeding grounds are for start-up companies.”
According to Francis Turner, MD of adtech start-up, ADYOULIKE, his start-up, too was given little support, leading him to look to France for growth. “If truth be told, the government has done little to nothing to support our business,” he says.
“My partner and I built up Content Amp, a UK native advertising technology firm, which was completely self-funded, into a successful company. Yet when looking for options to scale up and expand our business, both the UK government and also financial institutions were not interested in helping us. Due to this situation, we ended up merging with ADYOULIKE, a French native advertising company, in 2014 to fuel a combined global expansion.”
When Content Amp was founded, Turner says it was just two people in a room who self-funded the entire business, yet most start-ups may not be able to grow by bootstrapping their business.
“Coupled with this complete lack of support from government, financial institutions didn’t want to help us either, despite the fact that we’d created a successful company that was boasting significant revenue in a very short period of time. Within the time we were looking to expand, all the major financial institutions had been bailed out by the government and were adequately funded to support us. Yet they didn’t want to hear from us,” he tells GrowthBusiness.
“Once we began growing and were hiring more people, we also felt their was little to no interest in our business from government. Despite being featured in both The Everline Future 50 and The BIMA Hot 100 lists, not one government body has ever been in touch with us.”
According to Turner, tech start-ups need financial support, followed by collaboration and access to expertise to grow. “The Silicon Roundabout is a fantastic start, but more has to be done. The technology industry across the entire country has to be better supported financially, especially at the earlier stage. Meanwhile, access to skilled technical people and also, most basically, how to find such individuals is sorely lacking and something we struggled greatly with when we started,” he explains.
“Don’t get me wrong, the majority of work to make a business a success must come down to the founders and staff. However, I think some level of support and also interest is critical, especially as you grow abroad, where the government has a decent level of expertise in operating in these markets.”
Another growth obstacle Turner faced when growing his company was its location. “We were based just outside of London, in Windsor. The cost of property in the capital is insane and is actually still an issue even now. If we want to grow to the next level of having 30 to 40 people in an office, the prices get even crazier.”
Beyond the tech sector, in late December, SMEs called on the government to act, as seven in 10 businesses expect revenues to shrink or stand still in 2017. In a study carried out by commercial insurer RSA last month, just over half of UK SMEs said the government is not doing enough to help them grow, calling for the government and industry to work together to implement five measures in 2017.
- Provide more information on markets and consumer behaviour that SMEs could incorporate into their business strategy.
- Provide advice on what SMEs can do to protect their business from the potential effects of economic uncertainty.
- Invest more in developing infrastructure, such as broadband and public transport, to help SMEs operate more efficiently and reach more consumers.
- Provide companies with better access to finance so they can obtain the funding they need to expand.
- Provide more information on failed businesses and what led to their bankruptcy so that SMEs can better manage their risks.