Venture capitalists warn Tory leadership uncertainty threatens UK tech growth

The UK’s venture capital community has warned that uncertainty surrounding the Conservative Party leadership contest is threatening to derail Britain’s tech industry.

Unless the candidates leave the race early, the UK will not know who will be the next prime minister until September 5.

But venture capital (VC) firms are concerned that being in limbo for nearly seven weeks could jeopardize growth at a crucial time for the industry.

Venture capitalists also don’t know where the remaining Tory candidates will lead on specific tech policies after Boris Johnson’s resignation sparked a leadership contest.

For example, the controversial Internet Safety Bill has been delayed until Parliament returns from recess. Tory leadership candidate Kemi Badenoch has said she will scrap the legislation if she becomes prime minister.

“The uncertainty surrounding who will be the next Prime Minister is overshadowed by the uncertainty facing the UK tech community,” said Stephen Page, founder and CEO of SFC Capital. UKTN.

“The government’s wrongdoing is self-inflicted, but the disruption caused by our early-stage funding market, which UK start-ups depend on, was entirely self-inflicted.”

The SFC boss expressed concern that the UK is “rapidly losing ground as a world leader in key sectors such as fintech”.

Figures released in January showed UK investment in fintech hit a a record high of $11.6 billion in 2021.

For technology in general, UK tech startups raised a record £29.4bn last year. This trend continued in the first three months of 2022, with UK tech startups raising £9 billion. ahead of India and China and second only to the US during this period.

But there are concerns among British investors that political uncertainty will halt British innovation at a time when public and private markets have been hit by soaring inflation and rising interest rates.

“We had too many Old Etonians”

David Forman, managing director of Manchester-based VC Praetura Ventures, said UKTN that while the previous government had “lots of problems”, it had “actually started to see results” from some of its investments in British technology.

Foreman added that “while progress was slow, there was also a palpable sense of conviction that the initiative needed to be stepped up.”

He pointed to British Business Investment’s Regional Angels Programwhich sought to eliminate regional imbalances for investment in technology.

Praetura, based in Manchester, has a strong focus on supporting Northern startups to develop the region as a leading technology hub. He recently launched a A £20m Life Sciences Fund with the specific aim of supporting start-ups in Greater Manchester, Cheshire and Warrington.

said Foreman that the next Prime Minister should have a background that is more reflective of the UK.

“We had too many old Ethans in office with a ‘boys job’ approach.” Therefore, I would like someone else to get the opportunity to rule the country,” he said.

The Tory leadership in the race is uncertain

At the moment, there is a rather limited amount of information about the plans of future Conservative leaders to support start-ups.

Index Ventures partner Martin Mignot told about it UKTN that “it is vital that the next Government is fully committed to making the UK as welcoming as possible to these early stage businesses”.

Mignot said the next prime minister must “put talent at the top of the agenda” and improve share options to “give employees a real stake in the future success of their company”.

He added: “We welcomed the work that the previous government had already done in this space and hope that it will continue under the new government.”

From the point of view of Barry Downs, co-founder and managing director of Sure Valley Ventures, the main thing is “a constant focus on beating inflation.”

Downes described inflation UKTN as a “powerful destroyer of wealth” to be tackled as “priority number one”.

Inflation in the UK has reached historic highs and is now at 9%, with the Bank of England predicting a rise to 11% within months.

Downes also pointed out that greater support for university research and departments is key to boosting the UK’s standing. Greater focus on spinouts was cited as part UK Digital Strategypresented at London Tech Week in June.

The plan was presented by Chris Philp MP, who previously served as the UK’s technology and digital economy minister. However, Philp resigned from his post ahead of the Tory leadership contest, leaving the future of the plan uncertain and epitomizing the lack of clarity currently facing the UK tech industry.

While VCs may not be attracted to a preferred candidate, other sources in the UK tech industry have privately expressed their support for Risha Sunaku UKTN. The former chancellor was applauded for his support and interest in Britain’s fintech sector.