TL:DR – It’s not the next Bourne movie but refers to the error of Government support for businesses that are quite capable of supporting themselves.
In UK there seems to be a misconception that scale-ups need support. This came about because for a while we were failing to create unicorns and exits such as IPOs or major trade sales. Government sought advice from consultancies who not unsurprisingly came up with the conclusion that it was because startups needed more support to scale. However, this misses the real issue. The quantity of scale-ups relates directly to the number of quality startups coming through the system and we were simply not creating enough early stage activity.
Approximately 10 years ago the UK Government started to put major effort into the technology startup community, partly through TechCity and focusing on East London. This has been a success and the area now has a vibrant technology startup scene. Other areas of the UK have also benefited with tech clusters in university cities such as Oxford and Cambridge. However, a couple of years ago Government started to consult the eco-system players and came to the conclusion that there was a lack of support for later stage businesses. This has lead to the re-direction of resources into this sector and neglect of the real issues.
Startups develop in eco-systems which bring together resources to stimulate growth. This is largely a numbers game. The more startups that are created, the more unicorns you are likely to encounter. It is also a meritocracy. Only the best survive and this is how it should be. London has an extremely strong supporting eco-system for scaling startups with at least 100 VC funds with more than enough capital and capability to support any startups that are able to demonstrate sufficient product/market fit for scaling. We do not have a Series A crunch. We have a problem of not enough startups meeting the criteria of the VC community.
Businesses that do reach series A are normally extremely capable. They are also naturally provided with the resources to scale without the need for interference from Government or big five consultancies who have little right to be in this space at all.
There are still consideable issues at the startup phase. Great progress is being made in commercialising university IP using startup culture as the success driver. However, there is still a huge amount of work to be done in this field. The UK has traditionally been great at pure R&D but has lagged behind in getting these innovations to market and has often lost out to Silicon Valley and other eco-systems. We are now entering a phase where we can lead on frontier technologies such as AI, Machine Learning, AR/VR, Blockchain, Robotics and IOT. However, we need to do far more to address the university /startup interface and get these technologies to market.
I would argue that the current focus on scaleups is completely misguided. More resources need to be put into stimulating the commercialisation of the excellent work coming out of our universities and early stage startup eco-system. We should stop wasting money on management consultancies, accountants and other organisations that don’t play a natural part in the eco-system and we should ensure that early stage businesses are not starved of the technical and financial resources they need to thrive.
Blog by Paul Dowling — Co-Founder of Dreamstake the world’s first tech accelerator platform focusing entirely on taking startups from inception to Series A. Dreamstake identifies promising startups from universities and accelerators and provides them with access to the resources they need to achieve later stage success. This is achieved through a large programme run out of Google Campus in London and our own network of experts and investors.