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The last time the UK’s Labour Party won a general election the country’s tech sector was a very, very different place.
It was May 2005, and digital bank Zopa (then just two months old) was the only one of the UK’s current crop of 40+ active unicorns that existed. London’s ‘Silicon Roundabout’ — the spiritual home of startups in the capital’s east — was years away from development; it would be many years before the area near the city’s King’s Cross railway station would be home for Google and Meta.
In the final year of that government in 2010, UK startups picked up $2.2bn, according to data platform Dealroom. This time round Labour is grappling with a different beast. Last year UK startups raised $19.7bn. But money aside, the feeling among founders and investors is it’ll take some serious elbow grease to get the wheels turning properly on UK tech.
Speaking to dozens of tech folk in the hours after the results came in last week, two themes came up time and again: funding and access to overseas talent.
The outgoing Conservative Party — which has come under fire at times from the tech community — got the ball rolling on one of those things. Its proposed Mansion House reforms — which would unlock tens of billions of pension fund capital for startups — are seen as a promising step toward filling a (disputed) growth-stage funding gap. Many founders and VCs said that pushing through those reforms should be a priority for the new government.
“Closing this scaleup gap isn’t just about catching up with Silicon Valley; it’s about harnessing a massive economic opportunity to accelerate this country’s growth and prosperity,” said Catherine Lenson, COO at Phoenix Court, home of UK VC funds LocalGlobe and Latitude.
At the earlier stage, there’s also broad support for the government to continue investment schemes like the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) tax incentive programmes — which are designed to give tax breaks to investors who back new companies. One VC described them as the “blast furnaces of the startup economy”.
The Conservatives didn’t do so well on access to overseas talent. It implemented a series of reforms in the past year designed to curb net migration to the country — which has seen a 25% drop in visa applications, according to recent data from the Home Office.
Tech voices decried Tory pledges to cap migrant visas at the start of the election campaign — and many tell me that ensuring access to migrant talent is crucial to the success of the startup sector.
In the last week, Dr John-Arne Røttingen, the head of biomedical research charity the Wellcome Trust, said that top international researchers were turning down jobs in the UK because they can’t afford the upfront costs for visas. Fixing that should also be a priority if Labour is to deliver on its manifesto promise to work with UK universities to support the commercialisation of research and create more spinouts. A steady stream of strong researchers in the country would also help.
“It’s vital that the government makes visas for the tech talent UK startups need more accessible and does not impose further restrictions,” said Sean Kane, cofounder of startup network F6S.
Simon Murdoch, managing partner at VC Episode 1, added: “We have to subdue the anti-immigrant rhetoric […] Immigration can be a force for good outcomes. In Silicon Valley over half of all unicorns have at least one immigrant founder, including Google, Facebook and Tesla.”
So will the UK startup sector get what it wants? While Labour’s manifesto was light on tech policy detail, the mood is positive among the tech talking heads I’ve spoken to.
There’s a sense that there’s been huge progress made in the UK tech sector in the past 14 years, and many have high hopes that the support needed to continue that growth will be available under a Labour government.
The reality is that only time will tell — and many point out that a ruling Labour Party has never had to govern a tech ecosystem.
But what do you think? What’s the key thing that the tech sector needs the government to focus on in its first 100 days? What will be Labour’s biggest challenges? Get in touch and let me know.
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Read the orginal article: https://sifted.eu/articles/uk-election-tech-vc-founder-reaction/
