ONE of the UK’s most successful entrepreneurs has hit out at the City for failing to back technology firms, saying London’s funding community is seen as dysfunctional.
Mike Lynch, the controversial founder of Autonomy, said a timid culture is responsible for tech firms’ poor representation on London’s markets and that venture capitalists prefer to sell as soon as possible rather than help firms grow.
His comments come as new research reveals the extent of London’s funding gap. A study from researchers GfK in conjunction with Grant Thornton, released today, reveals that a third of the capital’s technology startups are being held back by a lack of capital, a situation which has been blamed on UK investors’ lower appetite for risk than their US counterparts.
The former chief executive of Autonomy, who had a tumultuous relationship with the City before selling his FTSE 100 firm to HP for $11bn (£7.3bn) in 2011, told City A.M.: “In the venture capital world London is considered dysfunctional. If you’re [an investor] and get [a firm] up to £100m value you sell it to a larger company and move on, you don’t float. The community has been so battered so they tend to sell out, or they build it up and take it to Nasdaq.” Lynch, who now runs an investment vehicle called Invoke Capital, said that new initiatives such as the high growth segment of the London Stock Exchange were welcome, but that “we are coming out of a very bad position”.