- Friday, April 19, 2024
By: Radhakrishna N S
By Nadeem Badshah
THE “bullish drive and optimism” of entrepreneurs has led to record investment in the UK technology sector, according to leading businessmen.
Tech firms have attracted over $11.1 billion (£8.6bn) so far in 2019, with the UK ahead of Germany on $5.4bn (£4.1bn) and France ($4.8bn/£3.6bn).
It is also more than double the $5.2bn (£3.9bn) that UK companies raised in 2016, the annual State of European Tech report from venture fund Atomico found.
Tech ‘unicorns’ in the UK – or start-ups worth more than £1bn – include Oak North Bank, which is headed by Rishi Khosla; digital bank Monzo; and food delivery service Deliveroo.
OakNorth Holdings secured investment from SoftBank and Clermont in February, which Khosla said would enable them to “continue scaling the group’s operations globally”.
Jaffer Kapasi OBE, from the East Midlands Chamber in Leicester, told Eastern Eye: “From a financial tech perspective, there is an irony in that political and economic uncertainty, as well as technological change and disruption, may well be leading businesses from all sectors to turn to ‘fin tech’ platforms to evolve and modernise their processes; thus creating extra demand and making the sector an attractive proposition to investors.
“Technology has traditionally been an area of strength for the East Midlands. It’s been interesting to see that despite (previous) Brexit uncertainty, businesses in Leicester and across the region have remained bullish with regards to the mid and longterm outlook.
“It is incredibly gratifying to see that in addition to domestic and European investors, British tech innovators are also attracting US and Asian investor attention and allocation.
“This is growing testament to the strength and depth of our entrepreneurial talent, coupled with the dynamic and deeply engaged ecosystem that has been established here in the UK.”
Britain is now the single largest source of billion-dollar, venture-capital backed tech companies from Europe with 29, followed by Germany and France.
There are an estimated 800 Indiabased companies operating in the UK, employing over 110,000 people.
Giants like Tata Consulting Services, which employ more than 11,000 UK staff across 30 locations, consultancy firm Infosys and IT company Wipro are already large investors in Britain.
Among the Indian firms now in Britain is taxi-hailing app Ola Cabs which opened an office in Wales, last year.
Oyo Rooms, a Delhi-based hotel-room booking service, opened a London office in April, while restaurant search and online delivery business Zomato already has a base in Britain.
Hotstar, a streaming TV service which shows the Indian Premier League (IPL) cricket tournament, has also rolled out its services in the UK.
Previous uncertainty over Brexit (before the general election last week), with the deadline for leaving the European Union set for January 31, 2020, is believed to have had a bigger impact on established firms building hardware or relying on manufacturing, rather than software and financial start-ups.
And research from Studio Graphene, a product design and app development company, found that 73 per cent of tech start-ups in the UK were confident of their growth prospects over the coming 12 months.
Ritam Gandhi, founder and director of Studio Graphene, told Eastern Eye: “This bullish entrepreneurial optimism and drive is what evidently continues to attract huge levels of investment into the UK tech sector.
“Not only is this something to celebrate and embrace, but it is also something we must protect in the aftermath of the general election, ensuring early stage tech businesses receive the support they need to expand at pace.
“Brexit might have dominated the news for over three years now, but it’s important to remember that as of yet, nothing has actually changed.
“The UK’s legislative and regulatory framework remains the same, and while some larger corporations have taken preemptive action to move offices or operations, the country’s tech start-ups have battled on regardless.”
Some of the data in Atomico’s report has highlighted a negative Brexit effect.
The number of venture capital deals in the UK reached 1,600 investments in 2015, compared to 1,130 last year and 1,300 so far in 2019.
However, separate research by the Department of Digital, Culture, Media and Sport in August found that UK tech companies secured a record £5.5bn in foreign investment in the first seven months of this year, more than the amount invested per capita in the US tech sector.
Vivek Patni, CEO of digital healthcare firm Lavanya Plus, revealed he had never considered moving the business to another country.
He said: “The infrastructure, support networks and ability to access investment, particularly in London, mean that it remains a great place to start and grow a business. And in my opinion, Brexit has not affected this.
“At Lavanya Plus, we’re currently seeking our next round of investment, so it’s reassuring to see statistics such as these, which underline that there is still significant appetite among investors to back exciting high-growth start-ups. Ultimately, there is a wealth of tech talent across the country, with fintech and our own health-tech sectors taking a lot of the limelight. We’re proud to be a part of it.”
Sukhi Wahiwala, a businessman and mentor for Forbes, believes new many financial tech companies have not been affected by Brexit because they have a global focus for customer sales.
He added: “It is not restricted to just the UK, it’s just that the stability of the UK banking system and investment structures are so great and so stable that it’s a good location for investors to be putting their money.
“Most of the companies that I have worked with in this sector have seen growth once they have received funds and proofed to the first stage of actually receiving the technology and delivering the product to the market.”
Meanwhile, Northern Ireland’s new financial tech envoy called for action earlier this month to help tackle the university brain drain. A third of university students have to go to England, Wales or Scotland because not enough places are available locally, Andrew Jenkins said.
He admitted that foreign direct investment had seen a surge after the signing of the 1998 Good Friday Agreement, but there remained a skills shortage.
Local companies have been urged to reach out globally for business and build connections on international trade missions to tackle the serious skills shortage.
Jenkins added: “There is no shortage of talent but we have a skills supply problem. Every year, around a third of our graduates leave Northern Ireland to go to England, Scotland, and Wales, so we are exporting talent on a yearly basis.”
