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Gerald Greck, CEO of TechNation
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The UK innovation ecosystem could quadruple in value between now and 2032, but only if the “right conditions” are met.
The latest and final report from tech nationFounded in 2011 to foster and develop the then nascent UK start-up sector, the organization is now in the process of dissolution following the withdrawal of public funding. As the staff began to pull down the shutters, the report – How Scaleu is builtp – expresses a positive view of the potential for further growth in a sector that policymakers see as vital to the economy as a whole.
And given the downturn in the economy we live in, the report chose to look on the bright side, suggesting that a sector currently worth about $1 trillion could be valued at $4 trillion in 10 years. I predict it will. However, this is not the case.
In fact, as the report admits, a naive estimate of sector growth over the past decade (allowing for peaks and troughs) yields a sector worth $2.6 trillion by 2032. , requires significant acceleration to reach the $4 trillion figure. To achieve that, many factors must match.
So what exactly does that mean? We spoke with Gerard Grech, CEO of Tech Nation.
As he enthusiastically points out, the UK currently hosts the world’s third most valuable startup and scale-up sector after the US and China, but India is not far behind. European competitors are also in the process of catching up. His success so far has been attributed to many factors, he says, including entrepreneur-friendly government policies, effective support his infrastructure, and efforts to de-risk investments in early-stage companies.
The UK recognized quite early in the game that encouraging tech entrepreneurship was at least one of the keys to its future wealth, but getting out of the start gate quickly doesn’t mean it’s going to It can be argued that sustained or accelerated growth is not necessarily guaranteed. 10 years. So can the UK startup community continue to thrive and attract investment?
evolution
Mr. Grech points to the importance of government efforts to foster cutting-edge technology. “The ecosystem is evolving,” he says Grech. “Governments are funding AI and quantum computing. The role of policymakers is to revitalize key markets.”
But as Tech Nation sees, direct government support can only take the UK ecosystem so far. To accelerate the growth of the tech sector, other things need to be in place.
additional capital
“It will require additional capital injections,” he says. “This could be done through the creation of sovereign wealth funds or by encouraging pension funds to allocate more capital to riskier investments.”
Greck said there are discussions within the government about the possibility of creating some kind of sovereign wealth fund. He cites Singapore and Norway as examples of countries that have successfully taken this path. Similarly, he believes there is a move on the part of pension funds to invest more. However, as he points out, the majority of investments this quarter are now from overseas funds.
Regardless of the source of funding, Tech Nation says that patient capital should be available at every stage of a company’s growth.
Talent is another matter. For the UK innovation economy to grow rapidly, it needs to attract talent at a time when hubs in other countries are also competing for much the same talent. The days of frictionless recruitment from the European Union are over. While this might be seen as a major disadvantage, Grech points to a potential opportunity. “The ecosystem needs to be really open to diverse talent,” he says. “We can attract people from Africa, India and America. Over time, that can be a competitive advantage.”
It depends on whether the UK is an attractive place to live and work. Elsewhere in Europe, it could be argued that tech hubs could draw talent from across member states while allowing people to enter on visas across EU borders. It’s a competitive world.
Grech says the UK remains attractive, especially thanks to the technical support infrastructure it has built.
But just as importantly, the report says new pathways need to be created to attract diverse domestically-bred talent into the innovation sector.
Realization of value
Finally, the third pillar of accelerated growth, according to the report, is a renewed focus on “value realization.” Grech says startups should think about exit plans from day one. This requires making sure the business is ready for the exit.
Exits may be due to acquisitions. But will the UK also become an attractive destination? As we’ve seen recently, London may not be the first choice for tech companies seeking an IPO. For example, there was a lot of wailing and gnashing of teeth when owner SoftBank chose to list British tech company ARM in the US instead of the UK.
Government-sponsored review by Lord HillI have developed a series of recommendations aimed at making London a good place for tech entrepreneurs to list their business. He said he needed new skills. “Banks need to invest in knowing how to analyze technology companies,” he says.
These are uncertain times. After a record 2021, investment in the tech sector will slow down in 2022. The UK also currently faces some real challenges when it comes to investing in key sectors. For example, the strategic investments both the Biden administration and her EU have made in green transportation technology are unlikely to match.
Gretsch hopes the government will do more to help the vital sector. Earlier this month, Finance Minister Jeremy Hunt announced his £3.5bn investment in technology, with quantum and AI particularly benefiting. “I am encouraged by these announcements and disappointed if there are no more,” he says Grech.