British investor timidity -- in contrast to U.S.'s "appetite for risk" -- is hurting Britain's chances of becoming another Silicon Valley, say London CEOs.
8 LinkedIn Etiquette Mistakes
(click image for larger view and for slideshow)
London's chances of creating its own Silicon Valley-style high-growth business ecosystem, or a new East End-based Tech City might founder due to a lack of support by venture capitalists and local money managers.
This week U.K. financial services firm Grant Thornton, working with data supplied by global market research firm Gfk, issued a tough audit of London's fledgling start-up culture's chances.
A third of prospective British Steve Jobs surveyed complained they are being hindered by a lack of capital, whether sourced from institutional or private investors, while almost the same percentage, 29%, believe their company is missing significant business opportunities because they cannot secure funding in time. Nineteen percent of respondents said they had to pink slip staff because they couldn't secure the necessary funding to keep them.
Almost a quarter (23%) of respondents said that the length of time it took to secure capital is an issue, while 44% of the smallest startups -- companies making less than £1 million ($1.5 million) -- said they are concerned about accessing credit this year.
"In the venture capital world, London is considered dysfunctional," he claimed, adding that when companies do get to size -- about £100 million ($151 million) -- almost no British tech CEOs choose to IPO but instead opt to "sell to a larger company and move on."
British tech firms have been so "battered" by London's money men, said Lynch, that "they tend to sell out or build up to take it to Nasdaq." Although Lynch's brand might be somewhat damaged in American eyes following the bad blood over HP's claims it had spent too much on his Cambridge-headquartered software company Autonomy, he still enjoys high status in the U.K., where journalists refer to him as "the U.K.'s first software billionaire."
Steve Leith, who heads up Grant Thornton's early-stage technology team, said there is a "stark contrast" between U.K. and U.S. tech funding. In the U.K., "whilst there is an increasing flow of angel capital, we see a growing gap for businesses requiring investment of £500,000 to £2 million ($755,000 to $3 million)", he said.
In the U.S., in contrast, the cycle of tech entrepreneurs reinvesting in start-ups is "fully developed and the VC community has a greater appetite for risk," he said. "[British] businesses need development capital," he warned. "Without it they are not only in danger of missing their growth opportunity, but in having to make redundancies, or at worst failing completely before they've really even begun."
How Enterprises Are Attacking the IT Security EnterpriseTo learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Digital Transformation Myths & TruthsTransformation is on every IT organization's to-do list, but effectively transforming IT means a major shift in technology as well as business models and culture. In this IT Trend Report, we examine some of the misconceptions of digital transformation and look at steps you can take to succeed technically and culturally.