David Soskin
In my book Net Profit published a decade ago, I predicted that the hegemony the USA enjoyed for the first 15 years of the commercial web would be challenged by the rapid expansion of internet penetration internationally, perhaps in Europe, for sure in Asia.
And that has come to pass as the initial lock that Silicon Valley had on the global technology industry has eased.
Europe has indeed become a landscape of exciting start-ups. Nowhere is this truer than in the UK. Here, the digital revolution got off to a rapid start in the late ‘90s as British consumers embraced ecommerce more quickly than just about anywhere else in the world.
According to PitchBook data, VCs invested $46 billion in Europe in 2020. And within the European continent, the UK remains the biggest draw for VC investment, with British companies raising $13.7 billion. Five new UK unicorns were created in 2020, more than in any other European country.
The UK offers many advantages for start-ups. The City of London vies with New York as the world’s leading financial centre. A now well-developed VC presence, helped by tax advantages offered by the UK government for investing in start-ups, has ensured the strong capital inflows required by early-stage businesses.
Rishi Sunak, the Chancellor of the Exchequer, said recently, “We want to make sure this is an attractive place for people to raise capital—we’ve always been good at that. We want to remain at the cutting edge...”
For centuries, the largest city in Europe, London has attracted talent from all over the world. Post-Brexit, the government has indicated that it wants to make the UK even more attractive.
In his March budget, Mr. Sunak stated that, by attracting outstanding talent working in tech and science as well as entrepreneurs, he intended to make Britain the “best place in the world for high-growth, innovative companies.”
"A now well-developed VC presence, helped by tax advantages offered by the UK government for investing in start-ups, has ensured the strong capital inflows required by early-stage businesses"
The Financial Times highlighted Mr Sunak’s comment that his visa reforms would be based on a “new unsponsored points-based visa to attract the best and most promising international talent in science, research and tech, new, improved visa processes for scale-ups and entrepreneurs, and radically simplified bureaucracy for high-skilled visa applications.”
The UK offers a number of other advantages too. One is the quality of its universities. According to the most recent (2021) World University Rankings, the UK accounts for four out of the top twenty of the world’s leading universities. These are: Oxford (ranked as the world’s top university), Cambridge, Imperial, and UCL.
Another advantage, of course, is English, today’s international language. A third is the country’s historical associations, not just with the “Anglosphere” but also with the rest of the world, given its historic trading connections.
Whilst London remains the start-up capital of Europe, the digital economy, by its very nature, does not respect boundaries. That is why so many of the biggest UK technology success stories have not been London-based. These include MoneySupermarket, (headquartered in Wales), The Hut (North of England), and SkyScanner (Scotland).
The UK has built up a stellar track record across a range of sectors, including FinTech, AI, and marketplaces. Ocado, founded in 2000—a month after the dot-com “collapse”— is a world leader in grocery logistics.
And, of course, the UK online travel sector has produced many successful start-ups. Of the 878 travel and mobility start-ups that had fundraising rounds between early 2018 and February 2021, 316 were in Europe versus 275 in the USA and Canada combined, according to the TravelTech Essentialist,
Within these numbers, London ranks number one, not just in Europe but also in the world, with 60 start-ups (San Francisco: 45).
One of the UK’s leading traditional retail businesses is the John Lewis Partnership. Their CEO recently said, speaking of the COVID-19 crisis:
“It’s been a real economic earthquake. We’ve seen decades worth of change in the space of one year…”
It is, of course, true that government lockdowns have caused economic chaos. But those same lockdowns have accelerated the transition to the digital economy. Plato has again been proven quite correct: necessity is the mother of invention. For start-ups, there is no better time to launch.
