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I find the UK a particular anomaly from the fund-raising perspective as: 1. High net worth angels can invest up to £100,000 into a startup and the UK governmen
by memossy 13y ago
I find the UK a particular anomaly from the fund-raising perspective as:
1. High net worth angels can invest up to £100,000 into a startup and the UK government will offer capital protection of up to 86.5%.
86.5%! Startups can take £150,000 that way, then there is another scheme that allows them to take up to £5,000,000 and the UK government offers up to 61.5% capital protection. Crazy. If you look at pre-money valuations in this light for angel-funded rounds, UK startups tend to raise at a 10-20x lower valuation than Silicon Valley startups..
2. Startups that make money of their patents only need to pay 10% tax on that money
3. Companies can get back 25% of their R&D costs from the government
4. Government grants of up to £250,000 (matched funding) for proof of concept, development of prototype etc on original, innovative products
If you had the above in the US, things would be far, far crazier than they are now.
That about half of European venture capital funds are from local governments despite tailwinds like this certainly points to a deeper cultural issue.
- pcrh 13y agoMy experience in the UK is that despite these "tailwinds", interest in supporting new technology is quite weak. My own experience is that this is primarily due to a lack of technological education in the upper echelons of VC, who mostly appear to come from a finance or City background. Attempting to persuade City types of the technical advantages of an innovation inevitably leads to a simplification of the issue and a lower level of insight and willingness to invest.
- thinkersilver 13y agoThe government incentives are certainly there but like you have already pointed out the culture is vital and sadly absent here (London,UK). It also feels like there is no money here either. When it does come, it's paltry and requires you to give up so much control.If we had a few successful high profile exits, talented engineers working for the Banks and Media companies may be more willing to take the risk. As it stands, I know few people willing to leave their cushy 6 figure salaries.
- vvvVVVvvv 13y agoTruth is, the UK is certainly the most liberal country of Western Europe. Good luck trying to get your business (startup or else) in France for example.
- ama729 13y agoActually, Denmark, Ireland and Estonia have more economic freedom than the UK, according to the Heritage Foundation: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom http://en.wikipedia.org/wiki/Index_of_Economic_Freedom
- vvvVVVvvv 13y agoHmm I'm actually experiencing Ireland as well and totally concur with that. I don't know about Denmark or Estonia though but I guess you'd be hard pressed to find more red tape than in France (in the EU context).