Deliveroo’s sale reignites fear over UK’s tech exodus
When London-headquartered Deliveroo announced in early May that it had agreed to be acquired by US delivery giant Doordash, it triggered more than just a major shakeup in the food tech sector.
To many in the industry, it was a familiar story – yet another prominent British tech firm snapped up by an overseas buyer.
And it’s part of a broader pattern that raises uncomfortable questions about the long term competitiveness of the tech ecosystem in the UK.
Deliveroo’s recent decision comes on the heels of years of other high-profile moves, including chip titan Arm’s decision to snub London for a Nasdaq listing, and Darktrace’s $5.3bn takeover by US private equity firm Thoma Bravo.
UK firms are increasingly looking across the Atlantic for capital, better valuations, and broader investor bases.
The talent and innovation are here, but growth happens elsewhere
“Deliveroo being snapped up by Doordash is yet another painful example of a British success story being bought out by a US giant, and a clear signal that the UK is losing its grip on scaling and retaining its own tech champions”, said Fuel Venture’s chief, Mark Pearson.
Russ Shaw CBE, founder of Tech London Advocates and Global Tech Advocates, offered a similar view: “Another shining light in the UK’s vibrant tech ecosystem, Deliveroo’s acquisition by Doordash, highlights both the strength of the nation’s entrepreneurial talent and the challenges faced in retaining it”.
“While it’s encouraging to see global recognition of British innovation, it remains concerning that for many of our leading tech firms, an overseas exit seems to be the endgame”.
Shaw warned that unless the UK takes stronger action to close the valuation gap with markets like the US, and cuts through bureaucratic hurdles, it risks becoming a launchpad for innovation that flourishes elsewhere.
He added that pro-growth reforms like those outlined in the Mansion House compact need to move from rhetoric to reality, if the country wants to keep its top firms on home turf.
“Ultimately, if the UK wants its brightest tech companies to stay and grow here, then the ecosystem must match their ambitions too”, Shaw said.
The issue isn’t a lack of innovation. Cambridge was recently ranked as the world’s leading science and technology cluster by intensity, with a rich spin out ecosystem from the University of Cambridge – the birthplace of UK tech success stories like Arm and Abcam.
But, as Baroness Stowell, chair of the House of Lords communications and digital committee, put in a recent report: “Too often it’s a case of UK begins, and other countries cash in. That has to change”.
Government strategy
The government has launched a series of strategies aimed at addressing the scale up problem.
In January, prime minister Keir Starmer announced the AI opportunities action plan, part of an ambitious agenda to rewire Britain’s economy around artificial intelligence.
The plan has attracted £14bn in pledges from tech firms, whilst promising over 13,000 new jobs.
Speaking at Nvidia’s developer conference in San Jose, technology secretary Peter Kyle made a bold pitch for Britain as an AI hub: “In Britain, we want to turn the relics of economic eras past into AI growth zones”.
He dubbed the UK as “not a blocker or a shrinker – but an agile, proactive partner”.
Meeting with leaders from US big tech OpenAI, Anthropic and Nvidia, Kyle urged more US firms to follow suit and invest in the UK.
But, American venture capital firm Andreessen Horowitz’s recent retreat from the UK suggests that challenges do remain in making London as viable an option as Silicon Valley.
In Febuary, the UK also attended the Paris AI safety summit. There, US vice president JD Vance warned that overregulation was to blame for “kill[ing] a transformative industry just as its taking off” .
This was a clear go at the EU AI act, parts of which came into force this year, and ban AI systems deemed to pose “unacceptable risk”.
The EU’s approach is expected to have global repercussions. As an article within the act states, its rules apply even to foreign companies whose AI outputs are used within the EU, echoing the extraterritorial effect of GDPR.
Many now see the act becoming a global benchmark too, and firms may choose to align with it to reduce any form of risk.
Positive initiatives for UK tech
There are signs of optimism, however.
British Patient Capital, a commercial subsidiary of the British Business Bank, has recently announced a £20m commitment to Cambridge Innovation Capital’s (CIC) £100m opportunity fund, alongside Aviva investors.
This fund is focused on deep tech, as well as life sciences, sectors which struggle to scale on British soil.
Andrew Williamson, CIC’s managing partner, said: “With this new fund we will support our portfolio companies, and scale-ups from the UK ecosystem, as they reach a defining moment in their growth – and at exactly the point where the UK often loses its most exciting businesses”.
The fund has already invested in Riverlane and Pragmatic Semiconductors – the former a leader in quantum error correction.
Christine Hockley of British Patient Capital added: “CIC has unparalleled access to the opportunities emerging from the Cambridge ecosystem… it’s providing critical growth funding to help these businesses reach their commercial potential.”
Too much talk, not enough action
Still, concerns persist that government support remains too fragmented.
One of the House of Lords communications and digital committee’s latest reports issued a warning: “The UK is at risk of becoming an ‘incubator economy”, it wrote, “unless it does a better job supporting UK AI and creative tech startups to grow into global competitors.”
It criticises what it calls a ‘spaghetti’ of schemes – overlapping financial reforms, tax incentives, and grants that confuse, rather than help, founders.
Instead of launching new initiatives, it urged the government to consolidate and streamline existing ones for maximum impact, as well as accelerate financial reforms, and create a coherent industrial strategy for scale ups.
As Baroness Stowell put it: “Every UK unicorn that gallops overseas to list, or sells out to foreign investors, is a blow to UK PLC and our aspirations for growth”.
The lure of Wall Street
The UK’s struggle to retain high-growth companies is maybe best illustratied by the exodus of firms to the US stock market.
Arm chose Nasdaq over London, despite pressure from UK ministers. Monzo and Revolut are both considering going public, but their decisions haven’t been made clear.
The London Stock Exchange has seen a 60 per cent drop in listed companies since the 1990s.
Lower trading volumes, stricter regulation, and more attractive valuations abroad are all pushing firms to look elsewhere.
Nicholas Lyons, former Lord Mayor of London, said at the time of Arm’s listing in 2023: “Far too often when it comes to choosing a place to list, they choose New York. The seed is sown here, but the reward is reaped overseas”.
But with Deliveroo’s latest move, it seems Lyons’ claim still rings true.