Originally written for the Financial Times.
The UK’s golden age is often referred to as being some time in the past when things were better, cheaper and easier. But as far as starting a business is concerned, I believe that time is now.
When I started my first company in 2004, aged 16, I remember spending weeks researching the requirements, visiting local government business advisers (having to take the bus because there was none where I lived) and reading photocopied factsheets. Business Link, the government-funded support service, was most useful in printed booklet form and only one of the big banks would even consider opening an account for me. Today, the basic foundations of any company – incorporation and a bank account – can be completed online in a day for £14.
Support networks now exist to help you every step of the way that simply were not around just a few years ago. From regular, informal meet-ups of like-minded individuals like London’s DrinkTank or the community around Birmingham Science Park, to incubator programmes like ignite100 in Newcastle and Seedcamp, which travels around cities across Europe, there is no shortage of experienced advisers willing to mentor and invest in seed-stage ideas. Having secured an investment from Seedcamp for my current start-up back in 2009, I can attest to the value, aside from the cash itself, of being able to easily access a wide range of interesting people not just in the UK but around the world.
Since 2008, the British government has also put a lot of effort into restructuring tax incentives, with major improvements in almost every one of the annual Budget statements. Through the Enterprise Investment Scheme, investors can claim up to £150,000 tax reduction on their investments each year and founders have access to up to £10m in tax relief when they sell their company.
Research and development tax credits are particularly useful for start-ups and small companies because they offer real cash from the tax man at a stage when they are still unprofitable (as most early-stage companies are for quite some time) or tax credits when money is being made. These can be claimed against employee salaries as well as expenditure, which means the amount can be a significant help to cashflow. Those employees who take the risk associated with joining an early-stage company in the UK can be granted advantaged share options up to a value of £125,000, to be taxed under capital gains rather than income tax.
For foreigners wanting to start a company in the UK from outside the European Economic Area (EEA), a new entrepreneur visa was created in 2011, which can be granted with just £50,000 of UK-based investment. Of course, EEA residents are free to relocate as they wish and once your company is based in the UK you can access various services throughout the world wherever the UK has an embassy through UK Trade & Investment, the government’s export support agency. The help here ranges from localised advice and introductions to important, high-level contacts to subsidised trade missions and full support services like market reports, or even making use of embassy facilities to hold events.
So why don’t more UK-based entrepreneurs celebrate our good fortune? I believe it is in part because so much media coverage focuses on the success stories from the US. As a result, many people believe that you have to be in Silicon Valley or New York to run a start-up in 2012.
I don’t agree with this. Spotify, Mind Candy, Canonical, Moo and Songkick are UK-based start-ups that are international success stories in high-growth mode. Even Silicon Valley Bank, a specialist hi-tech investment bank with £13bn in assets, recently opened its first branch outside the US in London.
The US still remains well known for high-profile “start-ups gone big” like Apple, Google, Facebook and Salesforce.com but the UK is now particularly well positioned to attract and support the right type of talent to create the same kind of businesses. In my opinion, the UK is not just a good place for start-ups – it is the best.