Britain’s venture capitalist community has warned that the UK’s technology industry risks losing momentum because of the uncertainty surrounding the Conservative Party leadership contest.
Unless candidates drop out of the race soon, the United Kingdom will not know who the next prime minister will be until September 5.
But venture capital (VC) firms are concerned that leaving them in limbo for nearly seven weeks at a critical time for the industry could jeopardize growth.
The VCs are also in the dark about where the other Tory candidates will land on particular tech policies after Boris Johnson pulled out of a leadership contest.
For example, the controversial Online Safety Bill has been shelved until parliament returns from recess. Tory leader candidate Kemi Badenoch has indicated she would scrap the legislation if she were to become prime minister.
“The uncertainty facing Britain’s tech community has been eclipsed by the uncertainty over who will be the next prime minister,” said Stephen Page, founder and CEO of SFC Capital. RATN.
“The disruption to the government is self-inflicted, but the disruption to our early-stage funding market, which British start-ups rely on, has been completely disrupted.”
The SFC boss expressed concern that the UK is “rapidly losing ground as world leaders in key sectors such as fintech”.
Data released in January showed that UK fintech investment reached a The highest level was $11.6bn in 2021.
Across technology as a whole, tech start-ups in the UK £29.4bn was raised last year. That trend continued in the first three months of 2022, with UK tech start-ups raising £9bn – putting ahead of India and China and only behind the US during that period.
But UK investors worry that political uncertainty will stifle British innovation at a time when public and private markets are hit by rising inflation and rising interest rates.
‘We had too many Old Etonians’
David Foreman, managing director of Manchester-based VC Praetura Ventures told RATN that while the government previously had “lots of issues”, it had “started to see results” from some of its investments in UK technology.
The Foreman said that “although progress was slow, there was a tangible sense of certainty about the need to balance initiatives”.
He focused on British Business Investments Angels Regional Programwhich sought to address regional imbalances in technology investment.
Praetura, as a Manchester-based firm, has placed a significant emphasis on supporting Northern start-ups to grow the region as a key technology hub. He recently launched a Life sciences fund £20m with the specific aim of supporting start-ups in Greater Manchester, Cheshire, and Warrington.
Foreman said that the next prime minister should have a background that reflects more of the UK.
“We have too many Old Etonians, with a ‘job for the boys’ approach, in the job. So, I want to give a chance to a different person to lead the country,” he said.
Unknown Tory leadership race
There is, so far, a relatively limited amount of information on the prospective Conservative leaders’ plans to support start-ups.
Martin Mignot, partner at Index Ventures said RATN that it is “vital that the next government is fully invested in making the UK as welcoming as possible to these early stage businesses”.
Mignot said the next prime minister should “put talent at the top of their agenda” and improve stock options to “give employees a real stake in the future success of their company”.
He said: “We welcomed the work that the previous government was doing in this space and we hope that it will continue under the new government.”
For Barry Downes, co-founder and managing director of Sure Valley Ventures, the key is to “overcome the continued focus on inflation”.
Downes described inflation as RATN as a “powerful destroyer of wealth” that must be tackled as “priority number one”.
Inflation in the United Kingdom has reached historic highs, currently at 9%, with the Bank of England predicting a rise to 11% within months.
Downes also noted that more support for university research and spin-offs is vital for the UK to improve its position. A greater focus on spin-offs was named as part of the UK Digital Strategywas unveiled at London Technology Week in June.
The plan was unveiled by MP Chris Philp, formerly UK Minister for Technology and the Digital Economy. However, Philp resigned ahead of the Tory leadership contest, leaving the future of the plan uncertain and highlighting the current lack of clarity facing the UK tech industry.
While VCs could not be tapped for a preferred candidate, other tech industry sources in the UK have indicated private support for Rishi Sunak for RATN. The former chancellor was praised for his support and interest in the UK fintech sector.
VCs warn that Tory leadership uncertainty threatens UK tech growth
Source link VCs warn that Tory leadership uncertainty threatens UK tech growth