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Yessi Bello Perez
Industry Analysis / Thu 22 Sep 2016

The UK Sharing Economy: Deciphering the challenges and its long-term potential

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“I think every business needs to be able to raise money to keep going and to be able to be profitable,” said Jo Bertram, regional general manager of Northern Europe at Uber, which has to date raised $8.71bn from 72 different investors.

Speaking at the Sharing Economy Symposium, hosted by Sharing Economy UK, earlier today, Bertram touched on the challenges faced by early stage tech firms seeking to raise venture capital money.

Giving Uber as an example, Bertram spoke about how raising cash could help firms capture the market share and customers needed to scale in the long-term.

Meeting demand

“If we had five drivers in London, and 10 customers, consumers would likely be seeing estimated times of arrival of about 60 minutes.

“The question is, how do you fill that gap until you can get enough demand that customers can get a car and drivers are actually getting enough work to prevent them going to work somewhere else,” she asked.

In terms of additional advice, Bertram praised the efforts of industry forums and explained how these could help entrepreneurs come together in hope of solving common problems.

“I find forums like this incredibly useful,” noted the general manager, adding: “Many of my counterparts in similar companies have some great ideas. They may work in a completely different industry, but some of the challenges will be similar”.

‘A natural home’

Also speaking at the event was Matt Hancock, Minister of State for the Department of Culture, Media and Sport.

“We [the UK] want to be the natural home of the sharing economy,” Hancock said during his speech.

He then reflected on the progress made in the UK since Debbie Wosskow, founding chair of Sharing Economy UK and founder of Love Home Swap, produced a report on the state of the sector in 2014.

“I thought that Debbie’s report in 2014 marked a very important step and since then we’ve reformed regulation so that you can rent out your room in London, we’re helping to build online trust through gov.verify and we’ve introduced a sharing allowance to ensure that people can participate in a small way in sharing without too much complication on the tax side,” said the minister.

The issue of trust

“One important issue [in the sharing economy] is trust,” said Hancock.

Companies like Airbnb and Uber rely on trust. The former is based on the premise that homeowners trust strangers to stay in their homes. And the latter stems from the notion that people will trust others to drive them around.

Additionally, consumers also rely – and need to be able to trust – the ratings produced by fellow consumers on the services that they’ve used or received.

Looking ahead

Andrew Saul, senior partner at international law firm Osborne Clarke, said he believed the sharing economy space would look entirely different in five years time.

“Many of the issues currently being faced by companies will have been resolved. User reviews will be much more sophisticated and trust will be less of an issue,” he said.

According to Saul, the insurance industry should have, by then, caught up with developments in the space. “They’ll be able to offer bespoke products to firms in the sharing economy sector.”

Hancock also believed the future was bright for those in the sharing economy space. “In short, I think this market is going to continue to grown and innovate,” he concluded.