back to article UK urged to stop bigging up startups, feed 'growing' firms

The UK must stop obsessing over startups and instead channel its resources into growing companies, a wide-ranging report has said. Britain now starts more companies per head than the US, but has a lower proportion of businesses gradually scaling up to become large companies, compared with the US and other nations, said the …

  1. Anonymous Coward
    Anonymous Coward

    UK firms need to think about the long term future and not just sell out to the US at the first offer.

  2. Otto is a bear.

    Some hope

    Whilst Tech City is based in London we can hardly be surprised that team Boris will want to big it up, to show it as his success. It helps him with the furtherance of his political career.

    For venture capitalists, it doesn't hurt, they can take an early exit on their investment, at above market rate, Sod the fact they've sold it off to an existing tech giant. The same is true for the entrepreneurs who found the companies, who wouldn't want to take an early exit and never have to do another days hard work.

    You won't change that behaviour until you change the rules on start-ups to encourage long term investment, and convince managers to stick with their creations.

  3. fnusnu

    "The report makes 12 recommendations targeted at central government, local government and community "stakeholders". These include: public bodies being evaluated on how well they are helping scale-ups."

    I'm from the government and I'm here to help...


    1. Yet Another Anonymous coward Silver badge

      A government that couldn't forsee that invading a country, removing the rulers, arming a bunch of rival warlords and then leaving could lead to terrorism - is going to decide which starup will be the new Google or Facebook.

  4. Rob

    More to the point...

    ... I'd like to see a report with survival stats for these Tech City startups. I wouldn't be surprised if the high number of tech startups is close to the amount that go bust/fail.

    1. localzuk Silver badge

      Re: More to the point...

      I dunno, I'd be more interested in how many scale up compared to how many get bought up by the existing giant corps like Microsoft, Google, Apple and HP.

      1. phil dude

        Re: More to the point...

        Sitting here in East TN, where power is 100% cheaper than London, land is %1000 cheaper, and weather is 200% nicer, I'd say they are " 'aving a laugh".

        The reason the US is successful in growing these businesses is due to a few key things.

        1) size of market

        Instant access to >320 million punters

        2) variety of business locations

        50 states, probably 10000 business districts. If you are mobile, you can choose (e.g. all companies seem to register in Delaware), from a vast number of locations.

        3) Support infrastructure

        Buildings or highways built. Goods can all be moved in massive quantities when needed. It is called the "interstate". This is a country that built > 10,000,000 new houses PRIVATELY, last year.

        4) Educated People

        They don't all have to be American when they arrive, but they'll become American when they stay.

        Europe's big problem, and by extension the UK is that the prevailing politics is parochial on a very small scale. The US is just as politically corrupt but the relative size of the economy leaves enough gaping holes for a Google, Facebook or Twitter to just "appear" as from nowhere.

        The Beer icon, because even THAT has become better here!


        1. Rob

          Re: More to the point...

          @phil dude, I gave you a downvote, I was with you all the way up until you dissed the beer, I find it extremely hard to believe that the Americans have figured out how to brew a decent ale yet ;-)

          1. phil dude

            Re: More to the point...

            The beer has improved considerably since 2012 when I was here in TN.

            As a scientist I have some evidence that things have changed...

            I like bitters. If you are from the UK you know what I mean. Not lager. Bitter.

            In Oxford, the Lamb and Flag and Turf keeps some very good ales.

            Back in 2009 a friend of mine from Oxford came over for a jaunt in San Diego, and we ended up one night at a "microbrewery". They had a cask-conditioned brew on. "Hang on, whats this?". Remembering that UK pubs often have the "cask conditioned" sign up.

            I ask the bartender. "Oh usually we pump them ourselves but every now an again we have pre-pressurised kegs". I am not exaggerating when I say it tasted very much like a bitter.

            So skip for a few years and last year I was in Boston for the ASHG13 conference. We had a really big p*ssup in a brewery - Harpoon to be specific. A few of us DPhil's got a tour and I got to ask lots of technical questions about their brewing. Here's that story:

            Back in 2004/2005 some clever guys (maybe MIT, but inset your boffin of choice) developed strain of yeast that could produce >8% EtOH at a great efficiency than before. They patented it. And then sold it to everyone they could under some sort of license. This gave the craft brewers a method of making high-EtOH beer with less sugar. In 2011 a number of the states changed the rules regarding the sale of high-EtOH beers (previously they had considered >5.9% liquor , which has a lot of red-tape associated with it). I asked how they clear their beer , "Oh we centrifuge it at 3400 rpm. But we can't do that with flavoured beer, as it loses the flavour.". They also remove all trace of the "special" yeast...

            So I like IPAs. They are the bitters of the new world. Not the same as Lamb and Flag Gold, I'll grant you. But the Californians are starting to make better beer faster than they made better wine.

            If you find yourself in San Francisco there are some great "brew pubs" you can get a sampling of beers from Napa and Sonoma (yes, I thought they just made wine too.).

            Ah, time for tea.


            1. Rob

              Re: More to the point...

              Thanks for the beer tips folks, I will definitely try some next time I hop over the pond.

          2. YumDogfood

            Re: More to the point...

            Rob m8, they have some seriously cracking brews going on here now. IPA seems to be goer with most Merkin's (+missus) around here (SoCal) but my fave is Lagunitas "lil somethin"[1] - guaranteed to get you wasted in a most delightful way.

            There are some crazed, trying too hard, "craft" brews that are well weird to be sure, just avoid anything described on the menu or label that looks like it should be for a wine ("buttery", "caramel", "chocolate", "mature abandoned socks" etc.)

            [1] Served @ Ink N' Iron fest while The Damned & Buzzcocks played on...

        2. Anonymous Coward
          Anonymous Coward

          Re: More to the point...

          "The reason the US is successful in growing these businesses is due to a few key things....."

          If it is so successful, then perhaps you can explain why the unemployment rates are about the same, labour force participation rates are about the same (having declined considerably in the US), why all the jobs created recently (in both UK and US) are similar low wage crud, and why both economies have financed "growth" purely through much faster growing levels of debt? Tax and spending levels are similar (although we spend more on an uncontrolled welfare state, and the US spends more on an uncontrolled warfare state).

          1. Dan Paul

            Re: More to the point...

            Our elected "leaders" (in both countries) are the biggest liars they can possibly be. They take credit for even the slightest growth and help the government regulations and expenses grow while taxing the piss out of everyday folk. It's a net zero sum game they play.

            There are mostly low wage jobs being created because that's all these small business owners can afford. The owners job pays reasonably in some cases but in others not at all. There are few if any high paying jobs being created ANYWHERE. It takes money to make money and no one is lending money cheap.

            The dummycrats have been trying to spend their way out of the recession, losing horribly, buying votes by trying to bring amnesty to millions of illegal aliens, and piling on the debt service just so no amount of Republican influence can ever get the US out of the debt trap.

        3. localzuk Silver badge

          Re: More to the point...

          1. Not really. We're part of the EU in the UK. The EU is a larger market, being 500 million people (plus the population of Switzerland and Norway etc...)

          2. Again, business locations in the EU are all over the place. OK, the UK alone doesn't add up but hey, we're part of the EU.

          3. The interstate is falling apart (to the extent that a recent report put it at $3.6tn to actually repair it all. Not to mention, the rail system in the USA is shockingly bad.

          4. What? Not sure what your point is...

          Also, American beer is pretty much awful, unless you hunt down micro-breweries!

          1. Yet Another Anonymous coward Silver badge

            Re: More to the point...

            1, in theory but it's not as homogenous in language or culkture. A killer app gets mentioned on a US TV show and it has millions of users the next day. It's hard for something new in silicon roundabout to immeditately reach a million Norwegians.

            2, Try opening a business in France or Italy compared with registering your silicon valley startup in Delaware, or moving an office from SF to Austin compared with switching from Berlin to Athens.

            3, Who cares about the interstate? Nothing I'm making needs trucking anywhere.

            4, The majority of American highschool kids are as thick as the majority of British GCSE-ers. But there are millions of them and some small percentage aren't thick. The country also attracts lots of smart foreigners - admittedly it then throws most of them out as soon as they finished their PhD on room temperature superconducting artificial intelligent nano-clusters - but some get to stay and build rockets.

            ps American beer in the northwest is a lot better than the tetleys/watneys/scottish+newcastle that is served in most of the UK. Yes bud is crap - but so is Carling

          2. phil dude

            Re: More to the point...


            1. 500 million citizens, and 48(?) passports, how many languages? how many tax zones?

            2. Try locating a business in Italy , France of Greece and tell me that. Or Manchester for that matter. The UK is the best business location in Europe and is still has massive bureaucracy. The rest of Europe loves red-tape even more than the UK does.

            3. The interstate is in constant repair and a source of much pork - yet it works. I live 1 mile from I-40 and I-75 constantly changing. Surprisingly, TN has very good roads. Georgia, not so. Cars here are cheap so roads need to work. My last tank of petrol? $2.54/gal (that's $3 UK gallon or $0.66/litre ). What do you pay? AND you have great trains! But you don't. London does, however. The US has some mediocre trains but it is HUGE. All of Europe has trains and they are highly variable. In the UK they are expensive and you have expensive petrol. Almost like the government doesn't want you to travel...

            4. My point is for all the bitching and moaning about jobs, the USA still makes an enormous amount of "stuff". Of all sorts. It educates a huge number of people - and all in English. It has a huge immigrant population but it also has huge amounts of land and resources to accommodate them.

            My point is Europe is at most a single market, but it has a lot of internal inertia caused by linguistic and legal differences. These things make it difficult to be a small business that can grow rapidly.


  5. Terry 6 Silver badge

    The system

    We've built a political system around *them* taking credit for new stuff. So no one has any interest in keeping existing stuff going on. That holds for businesses, education, even the NHS, which they keep messing about with because they don't dare say they want to scrap it. (Even Farage had to backtrack on that one).

  6. TheWeddingPhotographer


    I agree.

    Reward, promote and support success

    Hold the hand of those with the fizz and exuberance of a of new idea.

    As for the regional thing... Do not build more things in London - it is a hot, busy, overcrowded place already. The rest of the country is so overlooked in most areas.

    On the whole, if new (big) developments were pushed into the regions - besides the local growth the country would benefit overall, as any sustained growth would have space to thrive (in all senses of the word)

    1. Yet Another Anonymous coward Silver badge

      Re: Agree

      People -

      I need 20 C++ programmers, I could start my business in the Dales but I might have slightly more difficulty finding them than if I started in London.

      I'm a c++ programmer, I could move to the Dales in the hope of finding finding a job, or I could move to London and find 20.

      1. Anonymous Coward
        Anonymous Coward

        Re: I could start my business in the Dales

        "I need 20 C++ programmers, I could start my business in the Dales but I might have slightly more difficulty finding them than if I started in London."

        Why do your programmers need to be based in the same maximum-cost zone as you have chosen for your company HQ? There's this thing called networking, and sometimes it's more than just the local old boy network.

        I can see why some people find high-cost areas attractive for HQ, but for the actual work... if it can be offshored to Bangalore it can be rightsourced to Yorkshire.

        1. Yet Another Anonymous coward Silver badge

          Re: I could start my business in the Dales

          I need to put my programmers in London since I need a base of 10Million people to find 20 c++ programmers. I could outsource the management to wherever can provide suits able to "leverage synergy" cheapest

          1. NumptyScrub

            Re: I could start my business in the Dales

            I need to put my programmers in London since I need a base of 10Million people to find 20 c++ programmers.

            Why not use a base of 60+ million, and take programmers from anywhere in the UK? It means you could find 120 C++ programmers, if the going rate is 2 per million people. ^^;

            If you restrict yourself to the population of London, then you are of course going to be geographically restricted to London...

      2. AceRimmer

        Re: Agree

        "I need 20 C++ programmers, I could start my business in the Dales but I might have slightly more difficulty finding them than if I started in London."

        Only slightly more difficult to find. Position your self correctly and you can have Leeds, Sheffield, Bradford and Manchester all within commutable distance.

        Your 20 northern programmers will probably be more loyal than their southern compatriots.

        1. TheWeddingPhotographer

          Re: Agree

          I was thinking that..

          I was also thinking that some of the most talented programmers / IT bod's in the country allready live in a commutable distance of there too

        2. Yet Another Anonymous coward Silver badge

          Re: Agree

          Oreight keep thi shirt on.

          I wa just sayin that t'reason jobs go t'London is that thez lots o people so tha can find people easier and the reason that people go t'London is thez lots o jobs. Moving t'BBC to manc dun't change out..

          1. AceRimmer

            Re: Agree

            To be correct: The BBC moved out of Manc...

            ... and into Salford

  7. Pen-y-gors

    Google and Facebook?

    Yes, it would be nice to develop some UK businesses of the scale of Google and Facebook, but preferably not with their attitude to paying taxes!

    1. Anonymous Coward
      Anonymous Coward

      Re: Google and Facebook?

      "Yes, it would be nice to develop some UK businesses of the scale of Google and Facebook, but preferably not with their attitude to paying taxes!"

      Who'd build a business here? Due to planning rules property is expensive. Due to fuel duties road transport is expensive. Due to employer's NI employing people is more expensive than it needs to be. Due to an overheated and unbalanced economy salaries are too high in London & the SE. Due to cackhanded energy policy, energy is more expensive.

  8. Tony Humphreys

    The government support for startups is part of the problem. Last company I worked for would only employ people on government subsidies for the last few years. They have not yet kept staff past the subsidised period since these schemes came in 3 years ago. The flow of inexperienced staff means they cannot move on, and eventually pushed out slaried employees that were a 'cost' to the business.

    If companies cannot move past the startup phase, perhaps its because they are being paid to stay there!

  9. Novex

    While scaling up is needed, I believe we also need to encourage and support any kind of sustainable business of any size, in any sector (not just I.T.). Even the very small businesses provide work for at least one person each (and often more). And, it's often the case that a few of those small businesses naturally grow to become bigger players and employ more people. From small seeds do big plants grow, something this govern-mint seems to have forgotten.

    1. TheWeddingPhotographer

      @ noxex

      I get the sentiment, but just like in the UK Olympic program, there needs to be some strategy for it. (we could all learn a lot in the way we changed our approach to sports funding in the UK)

      The skill, as any gardener will tell you is that you must select the very best seeds, and ruthlessly weed out the ones which will die early. Some things are not worth supporting.

  10. Alienrat

    Outside london?

    They must have been shocked to discover that something happened outside London.

    1. TheWeddingPhotographer

      Re: Outside london?

      On explaining to a shop assistant in London that (at the time) I lived in Aylesbury, I was then asked...

      "What tube stop is Aylesbury"

      I then explained that Aylesbury wasn't on the tubes and was in Buckinghamshire. the response was.

      "Eeeewwww... Are you frightened of the cows, I would be"

      1. Peter2 Silver badge

        Re: Outside london?

        Brilliant. Don't you love the city boys/girls?

        She's probably never seen a cow* and doesn't appreciate that even walking across a field with cows in they just look at you with a bemused look and a "moooooh" before going back to the busy task of chewing grass.

        Unless you've got a wheelbarrow, in which case they think they are being fed and the entire herd will charge the wheelbarrow to get too the food they think is going to be in the wheelbarrow first.

        *of the four legged animal variety.

      2. Anonymous Coward
        Anonymous Coward

        Re: Outside london?

        Until 1961, Aylesbury was on the Metropolitan Line. Just saying.

  11. dogged

    36 (72 per cent) of the top 50

    Thanks, I don't feel patronised.

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