Restart of Deliveroo's sale fuels concerns about tech industry's move out of the UK
: The Great Escape: British Tech Firms Leaving the UK for Greener Pastures
The recent acquisition of Deliveroo by Doordash has sparked a frenzy in the tech world, stirring discussions about the long-term competitiveness of the UK's tech ecosystem. This latest move is just another chapter in a recurring tale of high-profile tech firms leaving British shores for foreign investment.
Mark Pearson, chief at Fuel Venture, summed it up bluntly, saying, "Deliveroo being bought out by an American giant yet again points to the UK losing its grip on its tech champions." The UK's tech scene boasts an abundance of talent and innovation, but growth seems to be happening elsewhere.
Russ Shaw CBE, founder of Tech London Advocates and Global Tech Advocates, echoed Pearson's sentiments. "It's disappointing to see yet another promising UK tech company succumbing to the lure of an overseas buyout," said Shaw. "While the world recognizes the British innovation, we're still struggling to retain it at home."
The concern is that unless the UK addresses the issues that make overseas markets more appealing to investors, British tech companies may continue to leave. Pro-growth reforms like those outlined in the Mansion House compact need to become a reality, if the UK wants its tech giants to stay put.
The issue isn't a lack of innovation. Cambridge, known for its intensive science and technology cluster and rich spin-out ecosystem from the University of Cambridge, is the birthplace of several UK tech success stories, such as Arm and Abcam. Yet, as Baroness Stowell, chair of the House of Lords communications and digital committee, noted in a recent report, "Too often it's a case of UK begins, and other countries cash in. That has to change."
The government has responded with a series of strategies to tackle the problem of scaling British tech companies. In January, Prime Minister Keir Starmer announced the AI opportunities action plan, an ambitious agenda to remodel Britain's economy around artificial intelligence. The plan has generated £14bn in pledges from tech firms and promises over 13,000 new jobs.
However, challenges persist in making London an attractive alternative to Silicon Valley. American venture capital firm Andreessen Horowitz's recent retreat from the UK suggests that the journey is far from over.
Moreover, the British government's approach to regulation is being scrutinized. The EU's AI Act, which has global repercussions, is a prime example. Critics argue that overregulation could stifle innovation and drive British tech companies abroad.
Despite these challenges, there are glimmers of optimism. British Patient Capital recently committed £20m to Cambridge Innovation Capital's (CIC) £100m opportunity fund for deep tech and life science sectors. The fund aims to support scale-ups at the critical juncture where many British companies leave the country.
Yet, concerns linger about the fragmentation of government support. A recent report from the House of Lords communications and digital committee warned that the UK risks becoming an "incubator economy" unless it does a better job supporting UK tech startups to grow into global competitors. The committee criticized the lack of consolidation and streamlining of existing initiatives, urging the government to take action for maximum impact.
In the end, the UK's brightest tech companies will stay and grow if the ecosystem can match their ambition. As Russ Shaw put it, "Ultimately, if the UK wants to keep its top firms, the ecosystem must remain a fertile ground for their growth." The kicker, however, is that the UK must overcome its struggles with scaling, competition, and regulation to do so.
- Firms in the UK's technology sector, despite their innovative capabilities, are increasingly agreeing to be bought out by foreign investors, as seen with the acquisition of Deliveroo by Doordash.
- The scaling of British tech firms is a significant concern, with the government announcing strategies such as the AI opportunities action plan to address these issues and make London a competitive alternative to Silicon Valley.
- Technology firms added their pledges to the government's AI action plan, amounting to £14bn and promising over 13,000 new jobs, in an effort to remodel Britain's economy around artificial intelligence.
- Despite British Patient Capital's investment in a fund supporting scale-ups in the deep tech and life science sectors, concerns remain about the UK's ability to retain its top tech firms, as it risks becoming an "incubator economy" without proper support for startups to grow into global competitors.
