The former CEO of British chip design firm Arm, Warren East, recently highlighted the challenges facing the U.K. in commercializing technology businesses on a global scale. According to East, there is a pressing need for a mindset shift within the investor community to help the country succeed on the world stage. He noted that lackluster growth and poor rates of GDP per head in the U.K. have been a source of national embarrassment, indicating a need for change at a foundational level.
One of the key issues pointed out by East is that firms in the U.K. that manage to achieve scale often end up changing locations or listing abroad in countries like the U.S. This trend is due to the difficulties faced in establishing global relevance from the U.K. While East acknowledges the potential of U.K.-based innovative technology, he also highlights the failure to realize as many global businesses as the country’s promise would suggest, pointing to a disconnect between potential and execution.
East, who also served as the CEO of U.K. aviation engineering giant Rolls-Royce, emphasized the importance of getting commercialization right in Britain. He pointed out that while a significant amount of innovation originates in the U.K., much of it is exported elsewhere for commercial exploitation. This disconnect between innovation and commercial success highlights a systemic issue that needs to be addressed through a combination of policy changes and investor mindset shifts.
Addressing the need for a higher risk appetite to support high-growth tech firms, East highlighted the disparity in investor risk appetite between the U.S. and the U.K. He noted that there are deeper pools of capital available in the U.S., enabling startups to scale more rapidly and effectively. To bridge this gap, East suggested encouraging more risk appetite within the U.K. investor community to foster a more supportive ecosystem for tech innovation and growth.
East also touched upon the importance of revisiting capital market rules to facilitate greater investments from pension funds into startups. By stimulating risk appetite and encouraging long-term investment strategies, the U.K. can potentially create a more conducive environment for tech businesses to thrive. While East expressed optimism about potential changes in capital market rules in the coming years, he also cautioned that businesses cannot afford to rely solely on regulatory changes and must take proactive steps to foster growth and innovation.
The challenges facing the U.K. in commercializing technology businesses globally are multifaceted and require a concerted effort from both policymakers and the investor community. By embracing a mindset shift, encouraging risk appetite, and revisiting capital market rules, the U.K. can unlock its full potential as a hub for innovative tech businesses on the world stage. It is imperative for stakeholders to work together to overcome these challenges and create a more supportive ecosystem for tech entrepreneurship and growth.
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