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Three reasons launching your tech start-up in the UK will help you grow faster

21 January 2021

Although successful tech businesses can very quickly become international and transcend politics and geography, where you launch your tech start up is hugely important. Launching in the right market can make the difference between failure and becoming the next unicorn. Funding, business-friendly government schemes and access to talent are all key for tech businesses. If you are going to launch a tech business, the UK has to be on your list of attractive locations.

For instance, the UK is already the 2nd largest fintech market in the world. The combination of a traditionally strong financial services sector and one the world’s leading tech hubs in London has led to the digital transformation of a very traditional sector. Growing fintech hubs in Manchester, Leeds and Edinburgh all contribute to a sector worth over US$ 9.1 billion.

Blockchain, artificial intelligence, virtual reality and augmented reality businesses are all also thriving in the UK’s uniquely start-up friendly environment. When it comes to virtual and augmented reality (VR/AR), a 2019 Immerse UK and Digital Catapult report shows the UK is currently Europe’s largest market.

Funding for tech start-ups

A wealth of investment opportunities

The UK investor landscape is rich and diverse. In the sub US$ 1.3 million bracket, there is a complex network of options such as crowdfunding, angel investors, family offices, and investor clubs. At the larger end of the spectrum, there is a wide range of expert and experienced VC and the PE professionals backed by well-regarded houses with no shortage of funds are interested in high-growth technology companies.

When it comes to investment, it is imperative to find the right investor that’s the right fit for your business. Given the maturity and sophistication of the whole business ecosystem in the UK, the quality of professional advice available to businesses here is extensive and highly experienced.

Innovation and tax incentives for tech SMEs

The UK has a good record for encouraging technological innovation. For example, under the Enterprise Investment Schemes, investors in smaller businesses can get back 30% or 50% of their investment from the government. They can potentially also roll gains from previous disposals into the cost of the shares, and so defer the tax on those gains.

For the SMEs themselves, there is a very generous R&D tax credit regime which can either be delivered in the form of cashback or as a reduction to your taxable profit. There are many research grants available too as well as a range of other corporation tax incentives. Another scheme - Patent Box, can deliver a 10% tax break on profits arising from patented technology.

Access to talent

Talent is always a key area of business. Accessing and investing in the right talent is important because it drives the development of a high-quality, innovative products that have the potential to lead markets. London and the UK, as existing tech hubs, have an abundance of talent with the experience to drive start-ups and SMEs. And, of course, with the easy access to finance means that businesses have the funds to recruit that talent.

Read our full report