Risk-averse investors need a bit of bravery to prove the UK is fertile soil for tech firms
Are you a glass half empty or half full sort of person? What about when it comes to investing? With surging inflation, struggling economies, and slumping share prices, you would be forgiven for saying the former.
But before we all become too pessimistic, it is important to remember that these are market issues – not isolated to London or the UK – and we must not lose sight of the positives that this country has to offer to tech companies with long-term growth potential.
As an international investor and entrepreneur with thirty years of experience in the tech sector, I have worked in different European cities. But it is London and the UK that has the most to offer in terms of investment opportunities.
No capital or country is perfect. There are always areas to improve on. Just last month the government was warned the UK was falling behind the US when it comes to investing in the “intangible economy” – such as computer software and proprietary tech.
Such research serves as a useful reminder. There can be no place for complacency: London and the UK must continue to pull out the stops to continue to attract leading tech players from around the world.
One vital ingredient is access to skills. A global glitch – inflation, a weaker pound and competition for talent – means that it is harder than ever to attract highly skilled professionals to these shores. Demand for top tech talent is outstripping supply.
This is being driven by international factors, but the government must respond better, and faster, than other countries. What is our magic medicine to ensure that tech entrepreneurs can more easily work and live in the UK? The “high-potential individual” visa, announced in May, will play a part in attracting the brightest and best graduate talent, but this needs to be balanced with visas for experienced professionals. The Scale-Up Visa should be implemented as soon as possible so that tech businesses are able to recruit talent during periods of growth by enabling them to bring employees to the UK.
The government can’t simply wave a magic wand to protect the UK’s tech crown. Investors play a role too. Those who are able to do so should adopt a greater appetite for risk.
Retaining our brightest tech stars is a challenge because other countries are willing to take bigger bets on them. US and Canadian investors tend to have more readiness for risk, meaning that they entice entrepreneurs from the UK across the pond. I have heard stories from roadshows where – on hearing the “ask” from a fundraising entrepreneur – the UK investor cries “how much?!”, while their US peer questions “is that all?!”. Change here would require the collective mindset shift of a nation – hardly a small ask – but it is an alteration that could unlock significantly more capital for investment.
We also need a long-term investment approach. UK tech investors must not over analyse short-term market moves or second guess geopolitics. This detracts from making good long-term investment decisions. The reality is that the volatility we are currently seeing in the public markets will likely encourage the best tech companies to stay private longer. Investors must be prepared for this, while focusing on a long-term profit horizon – rather than quick wins – that can drive significant returns in the decades to come.
This confidence is infectious, and will mean more tech companies start – and stay – in London and the UK.