Tim Bradshaw wrote a good piece in the Financial Times this week about what it’s like to be an entrepreneur in the UK and made some interesting comparisons with the US. The headline was “Entrepreneurs urged to shoot for the sky” and this was the main thrust of the piece – that entrepreneurs in the UK don’t think big enough and don’t get the necessary support to build really large companies. He compared that to the US where global leaders like Amazon, Google and Facebook regularly come off the Silicon Valley production line.
I talked to Tim when he was writing this piece and, as a Brit who has lived in New York for the last 10 years, it’s a subject that I seem to return to often. For me there are 5 key things that an entrepreneur needs to be successful.
1. People– you need access to high quality people with the right skills and experience to perform the roles that your business needs as it expands. This reaches right across the business and, while the UK is really strong in some areas like sales and marketing, two areas come to mind where there are not enough high quality people – software engineers and CEO/COO’s who can oversee the mid to large stage of growth. You could argue that software engineering is the reading and writing of the 21st century. I think it needs to be much more embedded into secondary school’s curriculum as well as more widely available at universities. The lack of experienced CEO’s/COO’s for that next stage of growth is mainly down to there being so few tech companies in the UK that have been through this growth in order to gain that experience. Here, I think founders need to be open minded about tapping other industries for talent and also looking to bring someone across from the US.
2. Funding –clearly the early stage investment market in the UK can’t be compared to the US on either a quantity or quality basis. However, I think the UK is pretty well covered at the early seed stage. This has been propelled both by the absence of other good investment opportunities and also government friendly schemes, like EIS, that make it more attractive. I would also say that a whole new category of so called ‘super-angel’ or smaller VC funds have emerged that are both backed by entrepreneurs and highly focused on specific markets. I’d include our own fund, Notion, within this category but also the likes ofAtomico,ProFounders and Passion.The market gets more challenged when you look towards the larger VC funds aiming at the bigger Series A deals and beyond. But I still think that good quality opportunities can raise money in the UK and that there are investors who can be good partners in really trying to unlock the potential of a business – not nearly as many as in the US but they are there.
3. Government – you need a government who is supporting entrepreneurs and providing the right environment for start-ups. There are two really important parts to this – tax and visas. I think the government has done a pretty good job here with the various tax efficient schemes to encourage investment, the extension of entrepreneurs relief and R&D credits and the introduction of the excellententrepreneurs visa. I still think capital gains generated from taking a start-up through to exit should be treated as an entirely separate category from other capital gains, for both founders, employees and investors, because of all the wider benefits that this brings; but generally I think this government is fairly entrepreneur friendly.
4. Time– time is a critical, and often overlooked, factor in driving entrepreneurial success. It’s a bit like looking at the rings of a tree as evidence of its maturity. The truth is that the UK technology market still doesn’t have too many rings. We forget that Silicon Valley has been around since the 1980’s and during this time there has been so much recycling of success and everything it brings including money, experience and confidence. The UK market had a false dawn with the Dotcom crash in 2000/2001 and has really only been around for ten years or so. As success in the UK starts to get recycled it strengthens the eco-system and make it easier for the next generation of entrepreneurs and you’re already starting to see that happening.
5. Attitude –for entrepreneurs to be successful they need the right attitude and I think this is the biggest thing holding us back in the UK. Entrepreneurs are not highly regarded enough in the UK and there is too much fear of failure – this is cultural and therefore perhaps the most difficult thing to change. For many people in the US, being an entrepreneur is the greatest thing you can be – it’s seen as a really exciting career performed by dynamic people who are highly ambitious and determined to ‘make a dent on the universe.’ In the US it’s all about how big the business could be and if things don’t work out then they believe they’ll be better equipped the next time – and they will be. In the UK there’s almost an embarrassment about failure, and being an entrepreneur is seen as a bit quirky and too risky for most people. The common response in the UK if you do set up your own business and fail is ‘Well now you can get a proper job!’ This has to change if we are going to foster more successful entrepreneurs and create more world beating companies. We have to respect and celebrate entrepreneurs and this will take time but I think it’s already changing.
I was going to include easy access to a big market in this but I think the internet has gone some way to breaking down geographical boundaries and therefore this is no longer so important.
In conclusion the environment for entrepreneurs in the UK is some way behind the US. I don’t think we’ll ever be able to catch up but I do think the UK can close the gap and the most important thing holding us back is an attitude that thinks about being an entrepreneur in terms of risk rather than adventure and potential.