The winds of change are blowing, and for the UK, they carry the scent of opportunity. I’m an American venture capitalist, formerly based in NYC and San Francisco, and I’ve started spending more time across the pond with my half British husband. While America has long been the undisputed leader in startup creation and venture capital investing, a quagmire of our own making has created a unique moment where the UK now stands at the precipice of a potential golden age, poised to attract top-tier tech and venture capital talent from the US and beyond. British founders who dreamt of going to Silicon Valley may well decide that London, Manchester, Edinburgh or Belfast are greener pastures. This isn’t just wishful thinking; it’s a logical consequence of the current macro climate, and the UK can seize this once-in-a-generation chance with both hands.
The political complexities of America’s current moment are self-evident, however they are only a part of what is causing the Wild West to lose its appeal. The cost of living in US tech hubs is so astronomical, founders practically need a Series C just to afford a studio apartment. In the UK, eggs are not yet a luxury. In addition, for many Brits who moved to the US on skilled worker visas, the increasingly Kafkaesque immigration policies are making it harder for the very people who built American tech empires to, well, stay in those tech empires.
For ambitious British founders, who might have once felt like the gravitational pull of the Valley was unavoidable, the equation is shifting. Why pack up your life, endure the visa nightmares and pay exorbitant rents when you can build something truly world-class right here, with access to a growing pool of local capital and talent? Delaware welcomes C Corps that have never set foot on her sandy soil, so you can have a legal US entity for investors who prefer to deploy into one without moving there. Large US and Middle Eastern venture investors have set up shop in the UK and the homegrown venture ecosystem continues to grow.
It’s not just Brits who will find the UK tech ecosystem appealing though. The open and ironic secret of the US tech industry is that while it’s domiciled in America, it’s largely built by immigrants. According to the National Foundation for American Policy, as of 2022, over half of the billion-dollar startup companies in the US had at least one immigrant founder. Further research from the National Bureau of Economic Research in October 2024 highlighted that immigrants accounted for about 24% of entrepreneurs in 2019, up from 19% in 2007. These figures underscore the vital role immigrant talent has played in building America’s tech dominance. Names like Sergey Brin (Google) and Satya Nadella (Microsoft) are testament to the incredible contributions of those who chose to build their dreams on American soil. But if that soil becomes less welcoming, less fertile, where will the next generation of innovators choose to plant their seeds?
A case in point
The UK can position itself as a welcoming hub for talent from other parts of the world who might have previously prioritised the US, including Americans.
The UK offers a compelling alternative: it boasts a stable political system, a world-renowned education system producing top-tier graduates and a burgeoning tech ecosystem alongside a long history of excellence in areas ripe for venture investment like the sciences, aerospace and financial services.
Venture capital, the lifeblood of the tech industry, will play a crucial role in this potential shift. Imagine the impact of attracting ambitious founders, seasoned engineers and visionary investors who might be reconsidering their futures in the US. The UK is already third in the world for venture capital and bringing back top talent as well as adding new investors grows the ecosystem potentially exponentially.
The UK needs growth; it is lagging behind global peers and doesn’t have oil or rare earth minerals to sell to play catch up. Social services including the beloved NHS and pensions are a huge obligation that current growth will struggle to fund. Turbocharging growth with high skilled, high income industries like tech grows the tax base and allows for the social safety net to remain intact. Economic data shows that venture capital has a uniquely outsized impact compared to other industries, with the Brookings Institute finding that “venture investment makes up only 0.2% of GDP, but delivers an astonishing 21% of US GDP in the form of VC-backed business revenues”. It’s reasonable to assume that the impact in the UK could be similar, with even small increases in the amount of VC deployed yielding huge gains for growth.
Efforts like the Global Talent and the High Potential Individual visas are steps in the right direction to encourage this kind of migration and making sure those programmes continue is important, but more is needed. Lowering barriers to venture capital fund formation is vital. In the US, small venture funds who provide much of the early catalytic capital to startups are affordable to start. They cost mere hundreds of dollars and a handful of days to launch and run in regulatory good standing. In the UK, a similar fund costs half a million pounds over the life of the fund and months of regulatory uncertainty. The government and FCA have talked about changing this, but so far there has been no action. A system that is similar to the US SEC’s would allow UK-based funds to launch faster, attract more international LP capital and entice more fund managers to live and invest in the UK. Enabling more private fund investment in startups will have results far faster and more long lasting than waiting on slow moving Mansion House reforms that stand to mostly benefit large global venture funds.
Winston Churchill said “Never let a good crisis go to waste” and as the world lurches towards increasingly aggressive times again, the UK has the potential to harness the crisis to become an even bigger global leader in tech and venture capital, attracting the brightest minds and the boldest investors from around the world. The issues currently facing America, while concerning, present an unprecedented opportunity for the UK.
Read the orginal article: https://sifted.eu/articles/uk-tech-hub-leader-potential/
