Tuesday 18 June 2019

UK really can grow Unicorns

Following on from Andrew's comments yesterday, a piece from The Times:

Britain is creating more $1 billion technology companies than any other country apart from the United States and China, a study has found.
Over the past two decades UK-based entrepreneurs have built 72 companies, including 13 in the past year, that have topped the ten-figure threshold — known as “unicorns” in the tech industry.
That compares with 29 in Germany, Britain’s closest European rival, and India with 26. Over that period, the US and China have created 703 and 206 respectively, according to research for the government’s digital economy council published today.
Investors have poured about $5 billion into British tech start-ups since January, reinforcing the country’s status as Europe’s leading high-tech nation, the research said. More than a third of Europe’s fastest-growing tech companies…

For once, we are getting it right - far more by luck than judgement. The UK is doing very well with tech start-up's. There was a time at the start of Brexit when it looked like Amsterdam and Berlin would clean-up (Paris as ever talks a good game but really...let alone now in Gillets Jaunes land).

But no, the UK and London have powered on. Powered by a few key things, as ever hard to emulate. One is the ease of working in the UK compared to the rest of the EU. Another is the ability to keep your money when you sell through generous EIS schemes, another is the ease of language and living in the UK and London, also that our economy is post-industrial and this suits the new tech start-ups. Finally and the killer is the ease of access to Finance. Only Silicon Valley, New York and London can cope with global Venture Capital needs. As such, the flow to the EU stopped and reversed.

Now we have a nascent industry in Fintech, Legaltech, Martech - you name it the UK is developing it in the professional services space but also healthcare. Brexit will have zero impact on this and luckily the Government is too pre-occupied to think about taxing or regulating it to death yet. So for now, happy days!


Anonymous said...

I'm not sure about Brexit having 'zero impact' on this....

I know 2 founders of current UK based 'unicorns', both of whom are not UK citizens. Over time both of their business naturally gravitated to London on the basis that tech, capital, talent and a large customer base is readily available here; however they both had significant other centres of gravity across the EU in Berlin, Paris, Stockholm and Lisbon.

Since the referendum both of them said that they expect that the type of talent they are chasing will be harder to get in London and easier to get in other EU cities, and that if they were starting again they'd be less inclined to concentrate on London at the expense of other locations.

I'd be interested to see how many of the 72 unicorns had non-UK founders - I get the sense that if you were a European tech founder prior to the referendum, basing yourself in London was a no-brainer; whereas now that might not be so much the case - don't underestimate how upset some of these people were/are about the result.

Anonymous said...

I see the only democratically elected leader of Egypt, Mohammed Morsi, has just died in his courtroom cage, after years of mistreatment and the massacre, imprisonment, torture and execution of thousands of his supporters.

I'm sute the US and UK will be ready for air strikes any day now... ypu'll notice how the news was first up in every bulletin...

andrew said...
This comment has been removed by the author.
andrew said...

All v. good but as the uks popn is about 0.2 of the us shouldnt that be 140 unicorns. Not 72?

James Higham said...

Amazing how, in the political turmoil or should we say the contrived political turmoil, business continues as usual - start-ups, established businesses, crippling taxation.

CityUnslicker said...

Andrew- by your metric how terrible is Germany then, let alone India!

There is a better proxy in access to money and talent where we excel along with the US (who have been doing it longer) and China (who can mis-allocate resources with impunity),

Anon - You are right about people being unhappy, my point was it is nice to say that living in Amsterdam is a better and nicer place than London if you like. But you don't get the same level of support so it become London Vs Brexit and the data shows London wins easily. My hunch is even in a hard Brexit London will win still.

rwendland said...

Anyone know of a the list of 72 UK Unicorns outside the Times paywall? Bet most are Fintech utilising our financial centre advantage.

The Wikipedia list, maintained from multiple sources, though probably US-centric, only list 8 current UK Unicorns compared to China 126, US 108, India 22 and South Korea 8.


UK has +2 Unicorns already sold (Skyscanner and Shazam), but other countries also had them - didn't count them.

Charles said...

Many Indians I know are convinced that the Indian computer and hi tech sector was a success because the government did not that it existed until it was too large to wreck by helpful government interference.

I suspect that one of the reasons that the U.K. economy is doing as well as it is is because our government is busy wrecking Brexit and does not have time to interfere with business. It is interesting to note how much damage Mrs May wants to do to our finances now she is not worried about Brexit. For the first and only time in my life I was pleased at the actions of Mr Hammond, who is trying to stop her. Note Mrs May cannot even give tax payers money away without annoying people.

Anonymous said...

Mrs May should have 0 influence on policy (other than that of any MP) now she's agreed to step down.

andrew said...

We compare ourselves against a vital economic superpower that believes freedom includes the freedom to die if you are poor or near someone who has a gun and is angry and thinks it is ok to lock up many of its own citizens.
Or a sclerotic economic superpower that thinks freedom is the freedom to not be shot and to be healed if you are ill and (badly) understands that locking people up does not turn them into good people, they need help.

I want the best of both, but along with most other people here understand that all these nice things have to be paid for and that is by many unicorns paying lots of tax.
Hence i would say these rankings show the eu failing badly and the uk "good but could do better" (as just about all my school teports said)

Anonymous said...

OT but worrying - to me, at any rate. George Osborne pretty much saying that Boris will cave - I remember that witty comment on BoJo repealing Article 50.


"He says he has left no-deal on the table, which he knows would do enormous damage to our economy and security. But so have the other remaining candidates. In truth, all of them know the House of Commons simply wouldn’t let it happen.

Instead, ask yourself which of these potential Prime Ministers is most likely to persuade the Conservative Party to vote for a repacked version of the existing deal? The one with the greatest credibility with hard Brexiteers.

Indeed, which of these possible leaders could you imagine making the even bigger leap and asking the country again for its views?

The candidate who first came up with the idea of two referendums back in early 2016. Of course, he denies all this — and, like the other candidates, promises to get a renegotiated withdrawal agreement out of the EU.

Perhaps he will. Most likely he will not. But one thing is for sure, having finally arrived in Downing Street, Mr Johnson won’t be in a hurry to leave it. "

Andrea Leadsom - the lost leader. Just for a handful of silver ...

rwendland said...

... to answer my own question - who are the 72 UK Unicorns, a presentation by dealroom.co for Tech Week 2019 list them (or at least their logos on page 16):


page 11 shows they are counting from circa 2008.

page 16 shows 54 have already cashed out ("realised" or "exited"), and 18 are current.

page 10 shows that the gorilla exit was ARM (computer CPU design) at $31 billion in 2016, by far outshining the rest. [Typically, I missed the ARM boat in my career which was to do with CPUs.] WorldPay is now worth $31 billion but was under $3 billion in its first sale transaction in 2013.

page 19 gives a by-sector UK analysis:

21 Finance
10 Retail
9 Health
9 Tech
49 total (of what? neither current nor since 2008)