Press Story

The Government should underwrite the first customer contracts of promising tech startups in return for a stake in the new businesses, according to a report by IPPR, the progressive think tank.

The move would make it less risky for potential customers to do business with a new tech firms, enabling them to secure early contracts and get innovative ideas off the ground.

In return, the Government would receive an equity stake in the startup, to be held in a Citizen’s Wealth Fund, which would be used to support skills and training for workers who face losing their jobs through automation.

The recommendation is among a number of solutions being unveiled today (Monday) when the report, Charting a course for the future: How London’s startup scene can survive and thrive in the age of Brexit is launched at Campus London, Google’s space for entrepreneurs.

The report finds widespread concern within the tech startup sector over the uncertainty associated with Brexit. Researchers interviewed more than 50 people involved in the tech startup scene. They discovered “a general, often very emotional concern from within the community” about how Brexit alters the perception of London, in particular, as a diverse, dynamic, open and welcoming environment in which to set up a tech business.

On a practical level, the startup community were concerned about the impact of Brexit on staff retention and recruitment, the possibility of regulatory divergence between the UK and the EU, and future access to finance.

The report therefore calls for stronger signalling from government on Brexit and regulation, to provide greater certainty and stability for startups and to help manage the risks.

Tom Kibasi, IPPR director, said: “The UK is a leader in tech innovation — but if we are to go from start up to scale up, we need an entrepreneurial state that helps business to flourish. Our novel first customer plan would help innovative businesses and give the public a stake in their success.”

Sarah Drinkwater, Head of Campus London, commented: “Startups have important economic, social and cultural value - they drive growth, tackle big problems and positively impact communities.

“It’s crucial that startup voices are heard. We want to work together with government and the industry to ensure the UK remains the best place to start or grow a business.”

Bim Afolami MP said: “I would urge the Government to take a proper look at this report, and respond to its recommendations directly. We need to use government in a smart way to underpin the advantages the UK has in incubating successful tech companies, and help us move past Brexit uncertainty into an even more successful future for the tech industry in the UK”

Liam Byrne MP and Shadow Digital Minister said: "If Britain is go from superpower of the steam age to a leader of the cyber age, we need to embrace lots of the ideas in this great report. Crucially we need to be reinventing our universities and colleges to become engines once more for diffusing innovation throughout every corner of business. This sort of progressive supply side strategy is the key raising productivity in a way that makes it easier to give Britain a pay rise."

Steven Hunter, Co-founder and CEO of fintech startup 9fin, added: "The UK has a fantastic startup eco-system, and London in particular is arguably the fintech capital of the world. After Brexit, the Government should do all it can not only to maintain that position, but to improve it. It's really important to send a positive message that the UK is still a great place to raise VC funding, find the best talent and build a business."

The report makes recommendations on how to strengthen the startup sector and spread its activities more widely across the UK. Others, for government and the sector itself, include:

Mobilise “tech for good” to build public confidence in tech - link back to key priorities outlined in the Government’s Digital Charter and show how the tech industry is working to solve key challenges on issues such as cyber security, disinformation and online harm.

Create Devolution Deals that build on established regional strengths in tech to ensure that people, no matter where they live, can be part of the tech startup community.

Encourage public sector procurement strategies to consider how to tender briefs for goods and services that use tech to improve efficiency and encourage innovation.

CONTACT

Florri Burton 07867 388895 / 020 7470 6154 / f.burton@ippr.org
David Wastell 020 7470 6146 / 07921 403651 d.wastell@ippr.org

For Campus London: Leila Hajaj Leila.Hajaj@nelsonbostockunlimited.com

The authors of the IPPR report are available for interviews about the report’s findings.

NOTES

Charting a course for the future: How London’s startup scene can survive and thrive in the age of Brexit can be found at http://www.ippr.org/research/publications/charting-a-course-for-the-future
on Monday 4th June 2018 at 09:00

IPPR is the UK’s pre-eminent progressive think tank. Our mission is to open up opportunity, power and prosperity to everyone through conducting rigorous research and generating big ideas. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence.
www.ippr.org

The independent report by the IPPR was made possible by support from Google’s Campus London.