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Author: Stuart Rock
Written on: 26 March 2018
Last updated: 27 June 2018
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Hunting the UK's first trillion dollar company

In a series of five long articles, Harry de Quetteville explores the potential of Britain's technology sector. There are many revealing insights and there is optimism.

The series begins in 2008, when 16 companies formed a "disorganised but congenial congregation" around London's scruffy Old Street and the term "Silicon Roundabout" was coined by Matt Biddulph. As he tells it, this was a "classically British community of people, creating a bunch of great things, but with a healthy dose of cynicism.”

Today, says de Quetteville, the UK - after the US and China - "has become - by almost any metric - the most powerful technology hub in the world." There are many factors behind this: the proximity of eight top universities in the London-Oxford-Cambridge triangle; the huge flows of VC investment; the favourable tax regime of the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS); the opening up of Government data, which was led by David Cameron's administration; the "recycling of talent" from the success stories of the first internet boom (featuring people such as Martha Lane-Fox and Brent Hoberman); and the impact of the 2008 financial crash which dumped a whole load of financial talent into the entrepreneurial marketplace.

While Silicon Valley may still have massive self-belief and ambition, the British technology ethos is different. Here there is a view that tech can actually do good. “Tech can be a force for good," is how Gerard Grech, CEO of Tech City, puts it. "That’s part of the UK tech brand, and I’ve not seen it elsewhere in the world.”

Unlike the top-down approaches of the EU or China, or the self-regulation of the US, the UK's middle-ground approach is well-suited for creating a healthy regulatory climate. The article cites Saul Klein of VC investor LocalGlobe: "We strike the balance between self regulation and regulation without stifling innovation...it’s a massive opportunity now because ultimately these technologies, these innovations at scale, need to be regulated." Mustafa Suleyman, a co-founder of AI company DeepMind, agrees that the UK is well-placed to balance the risks and potential of AI. The combination of technological expertise, cultural diversity, availability of capital, and constructive regulation is a powerful one.

In the second article, de Quetteville picks up on the issue of talent. We have to get better. Although there are an estimated 100,000 plus jobs needing to be filled in the tech sector, computer science graduates have some of the highest rates of unemployment. Blame is pointed at the universities with their outdated degrees, at the educational establishment for deterring students from taking hard subjects such as maths and physics, and the lamentable number of women entering the world of software development. Amali de Alwis, CEO of Code First: Girls, is quoted as saying that her small social enterprise "will be teaching more women to code than go through the entire British higher education system.”

There are some shout-outs, for the Ada National Digital College in Tottenham, north London, and for the East London Science School. But de Quetteville worries that private companies "with the scale and the means" will increasingly take responsibility from universities for their own recruits as "Britain’s traditional educational chain - school, university, job - is being broken apart." The onus - and it is urgent - is to fix our education system, particularly for poorer Britain.

The third article looks at the production of entrepreneurial companies, particularly through the universities. No one, says de Quetteville," is in any doubt that Britain’s pipeline of new companies founded on the pioneering technology developed at our world-leading universities is blocked." However, the emergence of Oxford Sciences Innovation is worth noting. With more than £600m to invest in Oxford University spin-out companies, it is the biggest fund dedicated to a single university in the world. The article quotes Riwa Harfoush, Principal at OSI, as saying: “For 900 years Oxford University has been an academic superpower that hasn’t been capitalised upon."

But it is more than just money. British universities need to develop courses in areas such as product development. Martina King, CEO of Futurespace, is quoted as saying that “commercialisation is a challenge for Britain" because "nobody here wants to be in sales. In America it’s a noble profession and there are huge amounts of training courses."

Missed opportunities are the stuff of British business and economic history. De Quetteville cites two stories: how the technique of producing monoclonal antibodies was developed but no patented in Cambridge - winning a Nobel prize but missing out on developing a market that is currently worth $55bn; and how the gene-sequencing company Solexa (again, started in Cambridge) was sold for $650m - but the purchaser company is now worth $35bn. We invent; the Americans sell.

The fourth article focuses on the task of building a unicorn business - with its "eye-bulging, sweat-patch inducing stress" and constant state of hyper-vigilance among the founders, backed as they are by ever-larger sums of investment. Between 2014 and 2016, says William Shu, the founder and CEO of Deliveroo, “the British tech ecosystem changed,” and “the ambition got bigger.”

De Quetteville observes that Britain is well-prepared "for selling the often intangible intellectual produce of the digital economy." This can range from insurance to cryptocurrencies. "In the sweet-spot crossover of finance and tech" London has a genuine advantage. Because of the huge amounts of patient data held by the NHS, we are also well-positioned in the analysis of medical information. And this is enhanced by Britain's leadership in AI - the technology that can draw "meaningful insights from those data sets."

The final article reviews some of the candidates for being Britain's first trillion-dollar company. Take Cambridge-based Arm, which has managed to become "the globe’s mobile processing unit,"- and one of our World Class Britain companies. Arm was helped by being British, says de Quetteville. "Its reputation as 'a polite, reserved, understated British company' was hugely in its favour in a marketplace where, today, major rivals in China or the US dare not give each other an inch." But Arm is no longer an independent company. It is owned by Japanese investment firm SoftBank. Companies with the potential but at earlier stages of their development include Improbable and Oxford Nanopore.

But the most confident prediction comes from investor and entrepreneur Sherry Coutu. "It will be in precision medicine," she tells de Quetteville. We have the data sets here...Spotting the patterns in genomes on our data set, you’ll be able to find solutions not limited to just our population, you’ll have something that fixes the whole world and you’ll be able to commercialise that on a global basis. That’s why I absolutely think the trillion-dollar company will be here.”

So, the takeaway.

The UK is already a world leader across many areas of technology. Our climate for innovation and progressive regulation is in our favour. To maintain our advantages, it will come down to, er, education, education, education - to quote a former Prime Minister.


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