THE BLOG

Three Ways The UK Government Can Protect And Develop Homegrown Tech

20/01/2017 12:39 GMT | Updated 20/01/2017 12:39 GMT

Criticism for UK Government lethargy when it comes to the support of UK tech companies took hold when CES organiser, Gary Shapiro, said that the UK Government's lack of support for start-ups attending the CES tech show was a "source of embarrassment".

Aside from supporting companies to promote themselves abroad, there are three core things the UK Government must do to ensure continued growth and innovation within our tech sector.

The first: make it easier to attract, recruit and retain top talent. The second: be sophisticated customers to UK-based tech companies and encourage others to do likewise. And thirdly, invest alongside the existing home venture industry and catalyse new home venture firms.

Uncertainty prevails for UK tech, right now. A parliamentary report, Brexit: some legal, constitutional and financial unknowns, released at the end of last year, revealed the extent to which Government confusion prevails.

A group of senior figures from the industry then issued an open letter to the Government, asking for greater clarity on topics including migration and investment. While I applaud the points made, many recommendations made in this letter fall short of being sufficiently prescriptive.

Consider that 78 per cent of UK companies have stated that a skills shortage in digital expertise is one of their main barriers to progress. Despite a rocky start when launched, we need the existing Tech Nation Visa scheme to be extended and better publicised. Of the 1,000 highly "exceptional talent" visa places reserved each year, only 200 will go to people recognised as bringing with them exceptional digital tech skills. To put this into context, less than point 1% (0.1)

of the 335,000 immigrants who came to the UK within the last year were accepted on the basis of being highly skilled tech talent. A larger portion must be well-skilled and positioned to help grow the UK's tech economy.

Further, the Government, through their Autumn statement, announced they will invest £400m over the next five years to "help put post-Brexit Britain at the cutting edge of science and tech". Some sceptics might say this funding only serves to replace some of the at-risk current funding the EIF currently funnels into UK startups every year.

Chancellor Hammond spoke how this funding would help fast-growing UK tech companies scale and avoid being snapped up in their early days by bigger companies. If average funding of a venture funded company is, for example, £15m then this funds less than 30 companies. To put in further context, merely the equivalent to the portfolio of one major venture fund.

Instead of barely plugging the potential gap left by pulled EIF funding, the Government must address how British companies can hope to compete with their US and Chinese counterparts, who benefit from billions, not millions, of funding.

We have to ensure that London keeps its place as Europe's top tech hub, to continue to be mentioned in the same breath as Silicon Valley, New York and Tel Aviv. Thinking about the unfolding legacy of UK-based startups who've hit the big time - Transferwise, Funding Circle, Deliveroo, Citymapper and ASOS, to name but a few - we mustn't miss the opportunity to continue to build on what they started.

The Government must make it a priority to nurture students of STEM subjects into world-class digital talent and complement this with outstanding digital talent from abroad both as university students and employees. Companies will thrive from a UK base if we make it simple to attract, recruit and retain top talent - whether that talent is homegrown, from neighbouring EU countries or further afield. The net benefit in terms of new jobs, consumer spending power in the domestic economy and ultimately local management capability and angel investors for the next generation of startups is overwhelming.

Conditions need to be right within the UK so that investors continue to stay here. But, it's not just investors we need to keep happy. Small companies depend on larger organisations here in other ways too - for example, many startups will be building B2B products and services to sell to these larger businesses. The Government must prioritise or set in place a commitment that where possible, tech systems, software and services will be assessed, purchased and integrated from home champions. In London and across the UK, they have easy access to these sophisticated customers in financial services and advertising in particular - for now.

The UK's tech scene can continue to thrive by focusing on its strengths - for instance fintech, fashion-tech and e-commerce - and making sure it continues to lead the way in these areas. This could manifest itself in the form of additional Government support for these particular sectors, or new schemes and incubator programmes like that at Level39 in Canary Wharf designed to help startups operating in these areas.

We must unite to reassure startups and large firms alike that we will work with, and rally against, where necessary, the Government to defend the UK's tech hub crown and the city's strength in tech ventures: access to talent; access to capital; access to local, sophisticated customers and partners who are confident enough to innovate with the best of Europe's burgeoning tech ecosystem - whatever shape Brexit finally takes.

By Richard Muirhead, 3x software entrepreneur and now General Partner, OpenOcean - a European early-stage software company venture firm