We’ve spoken to the UK tech investor, VC, angel and private equity community to find out what it makes of news that the Conservative Party has made a deal with the Democratic Unionist Party (DUP) to form a new government.
As a quick summary, Theresa May lost her parliamentary majority after calling an election designed to strengthen it. The Conservative Party secured 318 seats out of 650, losing 12 seats. The Labour Party secured 261 seats, gaining 31.
Having failed to secure the majority, the prime minister struck a deal with the DUP, which won 10 seats to form a new government.
Last month, we published articles giving an overview of what the Conservative, Labour and Liberal Democrat manifestos would mean for UK tech, but here we find out what the UK investor community makes of the election news.
Laurence Garrett, partner at Highland Europe:
Laurence Garrett, partner at Summary: Tech is borderless, so the result will have little impact.
“Technology is a borderless sector. It moves faster than governments can cope with and indeed is moving at a rate that is faster than the public can track. Politics is not irrelevant to the sector but I believe the impact of the election will have little change to the entrepreneurial and creative of the UK technology market.
“I am confident that the resultant political power will look to negotiate a suitable Brexit that attracts the great minds and engineers for our collective future.”
Harry Briggs, partner at BGF Ventures:
Summary: A change of PM is required to strike a Brexit deal that won’t harm UK tech.
“Clearly uncertainty is never good for business confidence, and because Theresa May’s ability to negotiate Brexit is fatally compromised (she’d be a laughing stock both in Europe and in parliament), there will likely be another leadership hiatus and temporary power vacuum.
“That said, as early stage investors, we are optimists and we back optimistic entrepreneurs who always looks for the opportunity rather than the downside. For example, a new ‘safe pair of hands’ prime minister such as Hammond might be less anti-immigrant on Brexit, which would be welcomed by startups needing international talent. Thankfully the UK has strong self-preservation instincts and I expect the Conservatives will make a swift and pragmatic change of leadership, and set out a fresh agenda to restore business confidence.”
James Codling, MD of scale-up investment platform VentureFounders:
Summary: The government must now invest in growing businesses sothe UK tech industry can flourish and boost the economy.
“While the election results were a surprise, it does not change the need for the new government to prioritise the need to invest in the businesses looking to scale in the UK. These companies, which have the potential to be the global tech leaders of tomorrow, are failing to grow due to a lack of financing.
Perversely, the success of these businesses will be crucial when weathering the storm of Brexit, as they will provide jobs and, as they grow, they will continue to contribute to the economy through tax payments and public spending. By ensuring these businesses are a success, the UK can retain its status as a European and global leader in tech entrepreneurship, attracting overseas investment and talent, whatever the conclusion of the Brexit negotiations.”
Simon Cook, Draper Esprit:
Summary: The government must connect with the startup community and ensure Brexit doesn’t damage access to talent.
“It’s important that the government continues to connect with the startup community, which is the lifeblood of future innovation and growth in the UK. We believe that there is a global investment appetite for UK tech startups and scaleups but key on the agenda has got to be continued access to talent.”
Stuart Veale, managing partner at Beringea:
Summary: The government needs to act fast to mitigate market worries. But the industry must also be proactive to encourage and facilitate change, too.
“With understandable uncertainty around the hung parliament, it is critical that the formation of a new government happens as quickly as possible. The continued success and growth of British businesses depends on the new government’s ability to mitigate any market worries. While it was reassuring to see the manifesto commitments to innovation and continued support for investment startups and scaleups, the industry is looking for more clarity around the specifics of these plans. The UK economy and the international investment community need reassurance that the government is committed to allowing high-growth businesses to flourish here.
Around negotiations with the EU, it is vital that the government sets out its position as quickly as possible – any prolonged period without clarity in a Brexit strategy could have a major impact on operations and future prosperity. For the UK tech industry, access to the single market and a guarantee of the right for European citizens to stay in the UK are defining issues. However, with 18 months of negotiations still ahead, we must be proactive as an industry and navigate the challenges we face together. The key priorities must be proactively closing the skills gap, encouraging STEM education and upskilling professionals.”
Tim Mills, investment director at Angel CoFund:
Summary: The investment community must work together to back back bold high-growth investments, spreading investment and diluting risk.
“While there will be concerns and added layer of uncertainty, the results of the election should not impact on the continued success of British businesses. Without a doubt, the UK is well positioned to maintain its ranking as a global leader in innovation, with an amazing track record for attracting investments and driving growth across the country. With continued governmental and investment support, the UK is the natural home for innovative high-growth companies.
In the investment community where we are trying to build the future economy, we must continue to back bold high-growth investments that will help cement the UK’s position as a powerhouse of technology and innovation. Specifically, we need to continue to work together with individuals and institutions, using syndication to enhance investment prospects and spread the risk. A model that allows a more extensive range of companies to be supported with a greater supply of finance across the UK.”
Luke Davis, CEO of IW Capital:
Luke Davis, CEO of Summary: The focus of Brexit negotiations must be to ensure the UK is the best place to grow a business.
“With investor sentiment towards Brexit resoundingly strong, the new parliament must remain steadfast in driving a global agenda for free-trade and investment. Critical to this will be securing the best possible agreement with the European Union and the enacting of targeted initiatives to make Britain the best place to grow and indeed invest in a business.”