In many ways, there is much about UK tech to celebrate. As a hotbed of innovation and entrepreneurship, we have created a flourishing start-up scene that is the envy of most of Europe. And beyond this we have a growing portfolio of successful mid-sized UK tech businesses, who have developed from their early days of being pioneering disruptors to become established players in the FTSE 350 index.
Trainline is a classic example of the latter. It was 25 years ago that, as a telesales company, we took a step into the unknown by turning our internal booking system into the UK’s first train ticketing website.
A huge amount has changed since the days when we closed our website overnight due to low demand, and today more train tickets are bought online than through any other channel. We have built on our domestic success by taking our tech into other markets, turning Trainline into Europe’s most downloaded rail travel app and one of the UK’s most successful tech exports.
This is a story I am hugely proud of – but in some ways it also underlines a current wider weakness in the UK tech sector: our startling lack of giant homegrown tech companies. It’s as if an artificial ceiling has developed above UK tech – but it’s one that we can smash through with the right policy support.
I recently sat down with a dozen UK tech leaders, all in charge of hugely successful and innovative British-based businesses, employing thousands of people in high-quality jobs that help power economic growth. The combined market size of these businesses is estimated at around $15bn-$20bn. This is a huge combined market capitalisation, and yet we are dwarfed by our American counterparts. If we were one joint company, at best we’d just about scrape into the bottom places of the Nasdaq-100.
In tech circles, there is an almost mythical status around decacorns – those companies that reach the market size of $10bn which marks them out as global success stories. Not one of those global success stories is a British company. When it comes to Big Tech, the UK’s story only extends as far as being the go-to option for regional investment from West Coast players.
There is so much untapped potential in our tech sector; we can, and we should, aspire to more.
So how are we going to take the UK’s tech industry to the next level, and make UK tech a global force? What can we do to create British-born, British-based tech companies that are both global giants in their own right, and also generate a flywheel effect that lays the ground for exponential future growth in the UK tech sector?
Competition policy needs rigorous enforcement to ensure UK tech companies are not sacrificed to the demands of existing Big Tech. We shouldn’t allow US players to use one dominant position to build another dominant position: fair competition is essential for innovation. The forthcoming Digital Markets, Competition and Consumers Bill must create the right framework that creates a level playing field and gives UK tech companies the freedom to develop as they deserve. We’ve seen the EU baring its teeth recently, with the new Digital Markets Act combined with notable tough enforcement fines. This is an area where the UK can learn much from our European counterparts.
Just as access to tech should be for everyone, so should tech policy. Creating protection for the public against the negative consequences of tech is important, and so is encouraging seed money and a fertile environment for start-ups. These are both existing strengths of government policy, but the mid-sized and larger UK tech firms need more.
Our domestic market simply isn’t big enough for companies to grow to compete with the biggest, often US-based, tech businesses so exporting our tech is the key to success. But a company can only be bold and expand internationally if it has a degree of certainty and stability on the domestic front, otherwise it becomes over-exposed to risk. Coherence in regulation and policy will help to drive certainty and consistency for UK tech businesses, allowing them to harness potential and set their sights even higher than we have to date.
That way we’ll not only develop more UK unicorns, but also those globally recognised decacorn companies too.
From the Industrial Revolution onwards, the UK developed successful global business titans – at first in steel, oil and banking, then later in pharmaceuticals and consumer products. So far though, we’ve failed to do the same in the tech sector. It’s time to put that right.
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