Monday, June 24, 2024

The UK is at risk of losing Europe’s tech crown

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The writer is chairman and co-founder of Founders Forum Group, Founders Factory and Firstminute Capital

One of the most exciting companies in the world right now is Mistral, an artificial intelligence start-up based in Paris. In just one year it has gone from an idea in the minds of its founders to a well-funded company able to compete with the likes of OpenAI.

Some of the best international technical talent in the world, including former senior figures from Nvidia and Tesla, are now choosing to start their companies in Paris. Last month, the French tech conference VivaTech attracted more than 165,000 visitors — a new record.

These are all signs that the French tech ecosystem has reached an inflection point. We are a long way away from the (once referred to) stuffy, insular France of a decade ago, when you could count the number of thrilling start-ups on one hand.

What has changed? According to attendees who gathered at a small post-VivaTech event we organise, the answer is not policy but something even more powerful: marketing. More specifically, figures from the sector in France credit the youthful President Emmanuel Macron who, since elected in 2017, has been a passionate advocate for the tech ecosystem.

“The most important change we’ve had in French tech is having a young pro-business president elected,” said Xavier Niel, the billionaire telecoms entrepreneur and investor. “It’s not what he actually changed that mattered the most — it’s the image of France that he completely changed.”

Niel’s comments led to a discussion between attendees, including the inventor of the World Wide Web Sir Tim Berners-Lee, Meta’s chief AI scientist Yann LeCun, Charles Gorintin (co-founder of Mistral) and Jim Breyer, the US billionaire investor, about the power of politicians to shape the image of tech ecosystems for better or worse.

Their conversation left me wondering about the priorities of the next government in the UK. Will the future prime minister be out there shouting that the UK is open for entrepreneurship?

While the UK is still the most vibrant tech ecosystem in Europe, crowns can be lost. Some parts of the country’s policy have gone backwards. Entrepreneurs’ relief has fallen from a lifetime limit of £10mn under Gordon Brown to £1mn, for example. Recent governments have not always had messaging about tech front and centre.

Recently, a senior UK politician told me there were “no votes in tech”. Does this evoke confidence in our country’s future as a global leader in the sector? Pair that with draconian non-domicile changes, proposed increases in tax on private equity carried interest, onerous worker protection laws and a looming clampdown on skilled immigrants and it’s no wonder we are under threat.

Meanwhile, the French are becoming more founder-friendly. They are emulating some of the UK’s pro-entrepreneurship policies, such as the Enterprise Investment Scheme, and going further in other areas. Policies like the “apport-cession” rules allow founders to reinvest their capital tax-free within two years. In addition, the “pacte Dutreil” can reduce inheritance tax on businesses by up to 75 per cent. Holding structures also enable capital protection until dividends are paid out. They are also ahead on pension funds investing in private assets, while their stock market is now positioned to compete with the UK’s. And friendly policies like the “impatriate” tax regime are more attractive than the UK four-year equivalent.

I would love the next UK prime minister to make tech-friendly policy decisions. But just as importantly, I would love them to recognise the huge power of being a champion for the British tech scene on the global stage.

Labour will announce its tech policies soon and I’m hoping they will be bold, long term and not populist. On the Conservative side, Prime Minister Rishi Sunak has been hamstrung by some of the zealots in his party, but he is clearly fluent in technology. He could use this skill to take the UK’s innovators to the next level and turn the country into a global talent magnet. He has already had marked success with the UK AI Summit. Britain’s entrepreneurs have a lot of ideas but the country needs to build a stronger single voice.

London Tech Week takes place this week and we are hosting our annual Founders Forum Global, an event that brings many of the world’s best founders to the UK. It might be an opportunity for French and UK tech communities to deepen their co-operation and partnership. But I hope that politicians from both sides of the aisle will be inspired to think about how to amplify the work of the companies featured.

I consider myself one of the UK’s biggest cheerleaders. As an immigrant who has chosen to live here for more than 45 years, I want to see this country continue to prosper. In my opinion, it is still the best place in Europe to start a technology business. Even so, the winds of change are menacing. We cannot be complacent.

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