The acquisition of tech darling ARM Holdings to a large and foreign conglomerate is a familiar tale. AI firm DeepMind was sold to Google, SwiftKey was acquired by Microsoft and Magic Pony snapped up by Twitter.
According to the Telegraph’s James Titcomb, “too many entrepreneurs seek the early sale rather than building the world-changing company. Of course, it’s hard to blame the entrepreneur who becomes a multimillionaire overnight, but compare the situation to Silicon Valley, where the founders of Facebook, Google and Snapchat were able to resist takeovers from bigger fish long enough to allow become giants in the space.”
As the title of the article suggests, his belief is that while we could create our own Google, it would decades as the UK needs to cultivate a longer-term philosophy.
It’s also believed that investors don’t have the scale to support small tech firms. As Hussein Kanji, co-founder of Hoxton Ventures, said: “It would still be hard for something like an Uber to be born out of the UK because I don’t think there’s a financing community that would give Uber the billions of dollars that it has consumed to get to global stage.”
But they’re not the only ones to doubt why Britain’s tech space has yet to create such a giant. As part of its Tech Talent coverage, the BBC quizzed entrepreneurs and investors on why the nation failed to find the next Facebook.
For Rohan Silva, former adviser to David Cameron, funding “has long been seen as a big problem in the UK”. He further told the BBC: “There’s two types of funding. There’s the funding that comes from friends, family and fools: the startup money – £50,000, £100,000 – to get going. There we’ve really made a big difference in the UK. We’ve created the world’s most generous tax breaks for that kind of investment.”
The second, he claimed, was scale-up cash: “There is a big role for government in providing a bunch of that funding, particularly when it comes to research in the laboratory and helping that go to market.”
It was a sentiment echoed by investor Neil Woodford, who explained the UK had been “appallingly bad” at giving minnows long-term capital. “The limited number of success stories in Britain have generally sold out early. This comes back to the capital problem. These businesses that have been successful and may have reached a couple of 100m market value, have been under pressure from their shareholders to sell out.
“That’s principally because of the time constraints on the kinds of capital that institutions have been able to provide to those businesses so they have been forced to sell out really and haven’t had the choice to stay domestic and access more capital to become the multi-billion dollar company they had the potential to come.”
Elsewhere, we found out why you don’t need a Google frame of mind to attract talent in the future.
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