Launched in May, the Future Fund scheme announced by Rishi Sunak currently excludes tech start-ups that have participated in a US accelerator programme – meaning the UK could lose top start-ups as a majority will look to move abroad.
“Having the intention of being in the UK and coming into the market means they will contribute and therefore, we will lose talent,” says Radeep Mathew, head of consulting at Leyton. “Some of these start-ups will probably move abroad, as they wouldn’t operate in the UK anymore. We’re going to lose out on talent, innovative ideas, and potentially the next unicorns. It ties against the concept of the UK trying to be one of the highly most competitive and innovative markets in the world.”
“Excluding those start-ups which probably have a good rate of success from accessing capital or the support that the government is providing in the UK could result in a lot of them closing.”
Mathew says start-ups supported by US accelerator programmes – such as those in place in Silicon Valley – could be costly for the UK.
“They could be highly innovative start-ups. Opening it [the scheme] up to them has only positives as opposed to not opening to them, the amount you can lose is a lot more than what you can gain,” he says. “It’s going to be counterintuitive.”
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Despite the start-up scheme only excluding about 100 enterprises, these will most likely be the most innovative ones as the application success rate can go as low as 1.5 percent for these US accelerator programmes.
“You need to be a really good start-up to get into these programmes. That means your chances of success are a lot higher. The top hundred makes a big difference than the thousands because in the start-up world, not many succeed,” says Matthew.
Condemning the government’s decision to rule out these start-ups, Matthew says the current guidelines could “knock-back” the UK in the European race for innovation.
“They better be thinking about retaining the people and innovation in the country otherwise we’re lose the market leadership position that we could achieve,” he says. “This could mean less venture capital inflow for support. It could mean people would be more reluctant to come here while other countries and other parts of the world benefit. there could be a negative impact on it from a wider ecosystem perspective.”
Matthew is expecting the UK treasury to tweak its Future Fund guidelines in the upcoming weeks as 30 founders and CEO’s have warned the British government of significant job losses, stating that hundreds of the “brightest start-ups will likely not survive this economic crisis.”