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I agree with this call to action. Sadly, I think there are more fundamental issues in the UK economy. For all intents and purposes, Venture Capital is dead in

I agree with this call to action. Sadly, I think there are more fundamental issues in the UK economy. For all intents and purposes, Venture Capital is dead in the UK. While companies do get funded in the UK and are technically "UK domiciled" - in action most of their Engineering and Product teams are located in Eastern Europe or India, or are startups from those markets (and China) who domiciled in the UK to raise from foreign investors. There just isn't enough liquid capital to invest in the UK compared to other investment classes available.

HPsquared 2y ago
I don't understand why it's so bad in a country that's supposedly amazing at financial services.
- alephnerd 2y ago
  It's because the UK is so good at financial services. It's fairly easy to deploy capital in the UK in mainland Europe, the US, India, China, ASEAN, and Middle East, which means there isn't much of an incentive to deploy it within the UK in industries that the UK cannot compete directly in. For example, Dyson has almost entirely shifted operations to ASEAN (Phillipines and Malaysia primarily). And AugustaWestland/Leonardo, Rolls Royce, AstraZeneca, GSK, BT Group, JLR, and BAE have largely shifted operations to the US and India. The UK could make it harder to offshore, but then that also destroys the UK's entire financial and services industry, because most of the capital in the UK exists because it's a connector for global markets and would leave if that is ended. They're damned if they do, damned if they don't.
  - HPsquared 2y ago
    On the other hand, the UK has all these cheap engineers. Is it just that they're not actually cheap, on the international market?
    - cjbgkagh 2y ago
      Rent, taxes and industrial regulation plays a big part. As does power costs. Then there is political costs, it’s hard to rely on UK politicians not doing foolish things and tanking your company on a whim.
    - dukeyukey 2y ago
      Cheap compared to the US. On-par for most of the Western world. Expensive on the international market.
      - alephnerd 2y ago
        Not really. UK salaries are largely comparable to those for a similar caliber of talent in China or India ($30-50k mid-career is doable in both markets). The difference is countries like India, Czechia, Poland, Israel, Romania, etc all provide competitive tax incentives or subsidizes for R&D work, so you can hire competitive talent AND get preferential tax treatment.
  - cjbgkagh 2y ago
    It was always going to be a trap, but it’s been so long in the making that those who started the UK on that path have long since retired wealthy.
  - James_K 2y ago
    I think "capital" is the wrong word for it. We've got a lot of money lying around, but capital implies something productive can be done with it. We can't eat money, and we can't tax it or else they'll screw off. Perhaps if we stopped acting as the worlds fixer for tax dodging we would end up being better off. I can't help but view the City as a kind of tumour, sucking the life out of the rest of the country to enlarge itself.
    - vishnugupta 2y ago
      I think most folks when say Capital they mean “Finance Capital” which UK is really good at. Even historically speaking UK was at the forefront of financial engineering which complimented their physical engineering and enabled to spread their empire and colonize so much. But UK post WW-2 and specifically post Thatcher stopped investing in physical engineering and overindexed on financial services the results are for all to see now. But you are right. I think the financial engineering has reached its limits and we see China’s investment in physical engineering over last couple of decades beginning to pay off.
      - klooney 2y ago
        The Chinese strategy of forcibly keeping their financial sector depressed seems pretty sensible as a long term strategy.
- alecco 2y ago
  > I don't understand why it's so bad in a country that's supposedly amazing at financial services. Because it's focused on predatory finance: funds cornering housing markets, money laundering, debt markets (think public debt and CDS), currency/rates speculation, etc.
  - alephnerd 2y ago
    It's not about predatory or non-predatory finance. In order to become a major financial hub, UK has very favorable foreign transaction laws. A significant amount of British-domiciled capital is foreign originated but only parked in the UK because of strong contracts law and linkages to just about every major investable market. This is both a boon and a curse, because why would you finance a $1M seed in London when you can deploy that same capital for a similar sized seed in Tel Aviv or New York and get a better return on investment by exiting or funding additional rounds. There is no innovation ecosystem in the UK, and it's too late to build one because other markets are just too competitive at this point - India, Israel, Czechia, Poland, etc provide very competitive tax incentives and subsidizes for foreign R&D investment and have done so for decades now. You might assume the answer is to add additional roadblocks, but that makes British financial services extremely non-competitive, and puts 2.5 million jobs (and voters) at risk. This is the exact same trap that Singapore and Hong Kong has fallen into, and both are trying to minimize it by becoming the goto financial hubs for target startup scenes (China for Hong Kong, India+ASEAN for Singapore) and investing in foreign startups (eg. Temasek Holdings in Singapore). The UK needs to do something similar - it needs to give up ambitions of being a peer of the "big boys" in innovation, and concentrate on becoming competitive in international dealmaking, maybe by making a public-private international VC fund like Temasek. Baillie Gifford (HQed in Edinburgh) and Index Ventures (HQed in London) are competitive in Tech Growth Equity globally (and especially in the Bay). There's no reason there can't be more Baillie Giffords or Index Ventures in the UK.
torginus 2y ago
Well my East European perspective is this: When management decides to launch a new product, they bring in an UK-based 'analyst' who usually does a piss poor job of gathering requirements/docs/building up the project, so you have to step in and 'shadow manage' the whole thing, from producing architecture diagrams to talking to customers, writing specs, writing Jira tickets, besides actually doing the job you're supposed to do. The only thing they do do is act as an interface layer to upper management and giving each other reacharounds. But when it comes to handshakes and glitzy product announcement galas, they're all over the place and you are not even invited, the best you can get is having your (usually misspelled) name show up in context of 5 other high-ranking ne-er-do-wells, who they want to suck up to. Then they leave for a higher paying position to another UK company, and post on linkedin about leadership and inspiring teams. You are forgotten, but not for long, since people actually start using the stuff you wrote and support tickets start rolling in. Poor poor UK people having to sit in all those executive positions while contributing nothing. It also doesn't help that for most West Europeans, places like Romania is synonimous with the Shadow Realm. The funny thing is, having them spit in your face like this is actually a privileged position, since that means you're usually out of the trenches, where you only see the Jira tickets that you need to solve.
dukeyukey 2y ago
> For all intents and purposes, Venture Capital is dead in the UK. The UK has the 3rd largest tech VC sector worldwide - only after the US and China > in action most of their Engineering and Product teams are located in Eastern Europe or India London also has the largest software sector outside the US, after the Bay Area, Boston, and NYC.
- nsteel 2y ago
  I think the large software sector here might actually be part of the problem. If you're smart, want to stay in London (expensive), but don't want to work in finance then it's going to be software. There's no interesting hardware jobs here (FPGA trading platforms do not qualify). These jobs do exist in other European countries so I think the parent was correct.
- alephnerd 2y ago
  > The UK has the 3rd largest tech VC sector worldwide - only after the US and China And as I mentioned before, most startups tend to only be UK domiciled for funding reasons, but majority of their operations and leadership are located outside the UK. Foreign (read: American) VCs tend to conduct transactions in a handful of very well regulated markets, so a Chinese, Indian, or Romanian startup will often have to make a domiciled corporation in a financial hub like the UK or Singapore in order to raise. For example, Revolut has around 16,000 employees, but barely 2k in the UK and around 7k in Poland+India - and most of these roles are engineering AND strategy roles. > London also has the largest software sector outside the US, after the Bay Area, Boston, and NYC Source? Boston is nowhere near a top software hub - both Seattle and Austin are much larger in the software space than Boston. And I would be shocked if the net amount of SWE roles in London is higher than Tel Aviv or Bangalore.

HPsquared 2y ago

I don't understand why it's so bad in a country that's supposedly amazing at financial services.

alephnerd 2y ago
It's because the UK is so good at financial services. It's fairly easy to deploy capital in the UK in mainland Europe, the US, India, China, ASEAN, and Middle East, which means there isn't much of an incentive to deploy it within the UK in industries that the UK cannot compete directly in. For example, Dyson has almost entirely shifted operations to ASEAN (Phillipines and Malaysia primarily). And AugustaWestland/Leonardo, Rolls Royce, AstraZeneca, GSK, BT Group, JLR, and BAE have largely shifted operations to the US and India. The UK could make it harder to offshore, but then that also destroys the UK's entire financial and services industry, because most of the capital in the UK exists because it's a connector for global markets and would leave if that is ended. They're damned if they do, damned if they don't.
- HPsquared 2y ago
  On the other hand, the UK has all these cheap engineers. Is it just that they're not actually cheap, on the international market?
  - cjbgkagh 2y ago
    Rent, taxes and industrial regulation plays a big part. As does power costs. Then there is political costs, it’s hard to rely on UK politicians not doing foolish things and tanking your company on a whim.
  - dukeyukey 2y ago
    Cheap compared to the US. On-par for most of the Western world. Expensive on the international market.
    - alephnerd 2y ago
      Not really. UK salaries are largely comparable to those for a similar caliber of talent in China or India ($30-50k mid-career is doable in both markets). The difference is countries like India, Czechia, Poland, Israel, Romania, etc all provide competitive tax incentives or subsidizes for R&D work, so you can hire competitive talent AND get preferential tax treatment.
- cjbgkagh 2y ago
  It was always going to be a trap, but it’s been so long in the making that those who started the UK on that path have long since retired wealthy.
- James_K 2y ago
  I think "capital" is the wrong word for it. We've got a lot of money lying around, but capital implies something productive can be done with it. We can't eat money, and we can't tax it or else they'll screw off. Perhaps if we stopped acting as the worlds fixer for tax dodging we would end up being better off. I can't help but view the City as a kind of tumour, sucking the life out of the rest of the country to enlarge itself.
  - vishnugupta 2y ago
    I think most folks when say Capital they mean “Finance Capital” which UK is really good at. Even historically speaking UK was at the forefront of financial engineering which complimented their physical engineering and enabled to spread their empire and colonize so much. But UK post WW-2 and specifically post Thatcher stopped investing in physical engineering and overindexed on financial services the results are for all to see now. But you are right. I think the financial engineering has reached its limits and we see China’s investment in physical engineering over last couple of decades beginning to pay off.
    - klooney 2y ago
      The Chinese strategy of forcibly keeping their financial sector depressed seems pretty sensible as a long term strategy.
alecco 2y ago
> I don't understand why it's so bad in a country that's supposedly amazing at financial services. Because it's focused on predatory finance: funds cornering housing markets, money laundering, debt markets (think public debt and CDS), currency/rates speculation, etc.
- alephnerd 2y ago
  It's not about predatory or non-predatory finance. In order to become a major financial hub, UK has very favorable foreign transaction laws. A significant amount of British-domiciled capital is foreign originated but only parked in the UK because of strong contracts law and linkages to just about every major investable market. This is both a boon and a curse, because why would you finance a $1M seed in London when you can deploy that same capital for a similar sized seed in Tel Aviv or New York and get a better return on investment by exiting or funding additional rounds. There is no innovation ecosystem in the UK, and it's too late to build one because other markets are just too competitive at this point - India, Israel, Czechia, Poland, etc provide very competitive tax incentives and subsidizes for foreign R&D investment and have done so for decades now. You might assume the answer is to add additional roadblocks, but that makes British financial services extremely non-competitive, and puts 2.5 million jobs (and voters) at risk. This is the exact same trap that Singapore and Hong Kong has fallen into, and both are trying to minimize it by becoming the goto financial hubs for target startup scenes (China for Hong Kong, India+ASEAN for Singapore) and investing in foreign startups (eg. Temasek Holdings in Singapore). The UK needs to do something similar - it needs to give up ambitions of being a peer of the "big boys" in innovation, and concentrate on becoming competitive in international dealmaking, maybe by making a public-private international VC fund like Temasek. Baillie Gifford (HQed in Edinburgh) and Index Ventures (HQed in London) are competitive in Tech Growth Equity globally (and especially in the Bay). There's no reason there can't be more Baillie Giffords or Index Ventures in the UK.

torginus 2y ago

Well my East European perspective is this: When management decides to launch a new product, they bring in an UK-based 'analyst' who usually does a piss poor job of gathering requirements/docs/building up the project, so you have to step in and 'shadow manage' the whole thing, from producing architecture diagrams to talking to customers, writing specs, writing Jira tickets, besides actually doing the job you're supposed to do. The only thing they do do is act as an interface layer to upper management and giving each other reacharounds. But when it comes to handshakes and glitzy product announcement galas, they're all over the place and you are not even invited, the best you can get is having your (usually misspelled) name show up in context of 5 other high-ranking ne-er-do-wells, who they want to suck up to. Then they leave for a higher paying position to another UK company, and post on linkedin about leadership and inspiring teams. You are forgotten, but not for long, since people actually start using the stuff you wrote and support tickets start rolling in. Poor poor UK people having to sit in all those executive positions while contributing nothing. It also doesn't help that for most West Europeans, places like Romania is synonimous with the Shadow Realm. The funny thing is, having them spit in your face like this is actually a privileged position, since that means you're usually out of the trenches, where you only see the Jira tickets that you need to solve.

dukeyukey 2y ago

> For all intents and purposes, Venture Capital is dead in the UK. The UK has the 3rd largest tech VC sector worldwide - only after the US and China > in action most of their Engineering and Product teams are located in Eastern Europe or India London also has the largest software sector outside the US, after the Bay Area, Boston, and NYC.

nsteel 2y ago
I think the large software sector here might actually be part of the problem. If you're smart, want to stay in London (expensive), but don't want to work in finance then it's going to be software. There's no interesting hardware jobs here (FPGA trading platforms do not qualify). These jobs do exist in other European countries so I think the parent was correct.
alephnerd 2y ago
> The UK has the 3rd largest tech VC sector worldwide - only after the US and China And as I mentioned before, most startups tend to only be UK domiciled for funding reasons, but majority of their operations and leadership are located outside the UK. Foreign (read: American) VCs tend to conduct transactions in a handful of very well regulated markets, so a Chinese, Indian, or Romanian startup will often have to make a domiciled corporation in a financial hub like the UK or Singapore in order to raise. For example, Revolut has around 16,000 employees, but barely 2k in the UK and around 7k in Poland+India - and most of these roles are engineering AND strategy roles. > London also has the largest software sector outside the US, after the Bay Area, Boston, and NYC Source? Boston is nowhere near a top software hub - both Seattle and Austin are much larger in the software space than Boston. And I would be shocked if the net amount of SWE roles in London is higher than Tel Aviv or Bangalore.