How UK tech can emerge stronger from the global downturn

UK tech has reasons to be optimistic despite challenging times, says Russ Shaw. Image credit: TLA

Sky-rocketing interest rates, the unexpected demise of Silicon Valley Bank and wider economic uncertainty have created a challenging environment for UK tech entrepreneurs seeking to secure funding. Understandably, investors have grown ever more cautious – venture capital funding has dropped by more than 50% over the last twelve months.

Against this backdrop, last Friday’s TLA & GTA Investor Showcase brought together Europe’s leading investors at the Here East innovation campus in London to discuss how the UK tech community can not only face these issues head-on, but emerge from the global downturn with renewed strength and purpose.

Thriving in times of turmoil

The current funding squeeze is not the first time that UK tech has had to navigate choppy waters. Many experts at the Investor Showcase, including Eric Collins, CEO of Impact X, and Molten Venture’s Bindi Karia, vividly remembered the shockwaves sent through the tech community by the bursting of the dot-com bubble in the late 1990s, or the 2008 financial crisis.

With experience of managing these past moments of crisis, industry now has much stronger systems of support in place. As Irene Graham, CEO of the ScaleUp Institute, put it: “We have far more funding initiatives and scale of funding than we did back in the early 2000s. We have a vibrant angel community and a growing VC community.”

Tech companies – with access to a thriving innovation ecosystem and top talent from renowned British universities – are far better placed to survive times of downturn, or potentially capitalise on new opportunities for growth.

Anne Glover, CEO at Amadeus Capital, agreed: “Entrepreneurs are as active as ever. Ironically, in downturns they can hire people better and get access to space and help more easily. In the next year or two, there will be great opportunities for entrepreneurs to get started.”

Even during these times of economic uncertainty, innovative startups in verticals such as AI or deeptech have continued to spring up all over the country. However, the UK cannot rest on its laurels if it is to build further momentum and compete with its international tech rivals.

The quest for UK tech sovereignty

As the war against Ukraine rages on and geopolitical tensions between the US and China simmer, the risks of relying on other countries for critical infrastructure and technologies becomes increasingly evident. Lakestar’s Stephen Nundy explained in his keynote address at the Showcase how players like Amazon, Microsoft or TikTok continue to grow their international influence, resulting in European citizens and businesses finding themselves increasingly dependent on foreign companies to access cloud services, communicate with the world and navigate everyday life.

Meanwhile, the UK has continued to lose critical infrastructure to international competitors, most recently as prize semiconductor asset Arm announced it plans to list in the US. In the race for digital sovereignty, this is a critical time for the UK to invest in building and maintaining tech infrastructures.

Doing so must include backing entrepreneurs who are working on critical technologies by supporting them with industrial expertise, clear policy guidelines and capital. Just this week, the government pledged £100m to support the development of a British version of ChatGPT. More of these forward-looking initiatives, alongside a coherent semiconductor strategy, are urgently needed to ensure the UK does not lose further ground on its international competition.

Moving diversity from talk to action

It has been proven time and time again that diverse teams perform better. Their creativity and innovative approach to problem-solving becomes particularly important at times of economic turmoil. Yet barriers to enter the industry remain high, and a lack of diversity in the investment world stubbornly persists. According to Atomico’s State of European Tech report, only 1% of funding raised in 2022 went to all-female founding teams. That figure is down from 3% in 2020.

At the Showcase, Angel Academe’s Sarah Turner and Included VC’s Nikita Thakrar shared their first-hand accounts of female entrepreneurs encountering hurdles when raising money. Even when presenting proven business models, female founders are often met with biases that make it harder for them to access the funding they need to scale.

TLA Investor Showcase at Here East.
TLA Investor Showcase at Here East.


It will take a collective effort to dissolve existing equalities and unlock the full power of diversity and innovation in the UK. Female founders who have already successfully raised funding are in a unique position to inspire further change by hiring diverse teams and supporting other women-backed startups. More broadly, businesses need to move away from talking about the importance of diversity to creating incentives that will boost diversity, for example by connecting the bonuses recruiters receive to concrete diversity targets.

Saul Klein, serial entrepreneur and one of the UK’s leading investors, mirrored this sentiment at the Showcase when explaining the role businesses play in supporting neighbourhoods and acting as a force for good: “You have to put your money where your mouth is. Businesses need to bake their values into their business model, hiring practices, where they take money from and where they invest it.”

Reasons to be cheerful

Faced with industry-wide layoffs and a funding downturn, the UK tech investment community has dealt with its fair share of obstacles lately.

Yet, the TLA & GTA Investor Showcase showed we have strong reasons for optimism.

Leading investors are more committed than ever to foster diversity in the tech space, while entrepreneurs across the UK and EU continue to develop innovative new products and build critical infrastructures at the forefront of addressing some of the great challenges our society faces.

Russ Shaw CBE is the founder of Tech London Advocates & Global Tech Advocates, and a regular UKTN columnist.