If someone asks you if the UK is a good place for tech or not, do you find yourself giving the answer ‘it depends on who you speak to’?
We are told by the government that the UK is the best place to invest and grow your business. Its website trumpets the impressive statistic that London remains the third biggest market for the tech sector behind the US and China, and recently at London’s Tech Week, the Secretary of State Chloe Smith reiterated the impressive statistic – a sector now valued at $1tn.
Leaders of companies at all different stages of their growth, talk of London as a valued tech hub – of capital, talent, and opportunity. When I first moved to London, around 10 years ago, this is what attracted me to set up my business here, rather than in other European cities.
And yet, there seems to be a natural culture of pessimism-first in the UK and we see trickles of discontent. Revolut, one of our great British success stories, (and I have to disclose that its chairman, Martin Gilbert, sits on our advisory board), has recently been waging a public battle against the Bank of England with, what they see, as a frustratingly slow and reactionary view of new banking technologies.
I myself, on a recent trip to San Francisco, was struck by how easy it was for startups to open a bank account and plug into entrepreneurial ecosystems for example – days, rather than weeks here.
We saw what happened with Silicon Valley Bank, and the unwillingness – as was laid bare by the crisis – of some banks to support emerging technology, one effect of which was to create a massive dependence on SVB by fledgling businesses that are inevitably less secure in their prospects. It was clear that there has been no attempt ,over many years, to spread the risk.
Of course, not all of those businesses will succeed. And yet we need to support businesses and technologies that are vital to create growth, jobs, and provide the next generation of brilliance in tech which the world vitally not only needs but expects. HSBC’s rescue is a smart move and potentially a great boost for UK tech.
And the UK is not immune from global factors. Only last week, a report by Goldman Sachs concluded that the UK has mixed growth momentum, and strong inflationary pressures. It is an accepted view that the FTSE100 and FTSE250 have underperformed global indices, and the ‘City’ of old with its mega-deals is a far cry from where we are now, struggling to attract listings – especially in tech. It’s not just startups that are exciting.
‘We all have our part to play’
I see growth-stage companies doing well, and which still want to be in London. At this point in their journey, they could up sticks and move somewhere else – Dubai, Barcelona, Berlin. But so far, they choose to stay here, and that is good news for us.
London, and Britain, is at its best when it embraces new technology. The whole ecosystem needs to be geared to support this ambition – from regulators through to investors. In fairness, the recent noises from the Treasury are encouraging. A £100m AI commitment is good.
On top of that, Chancellor Jeremy Hunt wants to support academic computer scientists with £900m to build a supercomputer in Edinburgh. So far so good. But, for example, Amazon alone spends around $25b a year. The British government can’t compete with the private sector.
We have creativity and a crucible of capital in London. We now need more incentives from the British government for the private sector to invest. While so far, out of the five largest companies with clusters for training large models (Amazon, Google, Oracle, Microsoft, Alibaba), only Oracle has its site in the UK compared with four in EU and four in the US.
So, depending on who you speak to, there needs to be an honesty in our response. Yes, we could do more. Are the regulators over-cautious? Possibly. Could investors be nimbler and make braver decisions in support of startups? Probably. And the government needs to encourage as many businesses as possible to base their operations here.
We all have our part to play. But London remains a valuable and valued place to do business, ignore those naysayers, and we should do all we can to keep our crown.
Konstantin Sidorov is the CEO of the London Technology Club.