Britain knows how to seed a scaleup. But can it back one all the way?

The Head of AIM & UK Primary Markets at the London Stock Exchange, Rupert Hargreaves, raised a question about how Britain can keep high-potential tech founders based in the country, instead of them moving abroad with their growth stories. This posed a challenge to the panel of tech founders during the SCALE Summit in London. Four founders, Marcus Stuttard, Grace Almendras Castillo, Michael Smith, and Lewis D’Ambra, discussed the issue.

The starting conditions in the UK are strong, according to all panelists. They praised the UK's exceptional talent-to-cost ratio, regulatory approach, and access to institutional capital. Grace Almendras Castillo, a founder who moved to the UK under a Global Talent visa, argued that the UK's ecosystem is a secret advantage for founders, as they can build their products here and hold IP in the UK.

However, the panel identified a gap in the middle of the scaleup journey. Founders have difficulty securing funding as they transition from small businesses to large, scaled-up companies. Michael Smith, co-founder of Sagittal AI, noted that investors are hesitant to invest in UK startups until they reach a certain revenue threshold. Lewis D’Ambra, CEO of Space Forge, highlighted that most of their private capital comes from outside the UK due to the higher risk appetite in other countries.

To address this issue, Stuttard emphasized the importance of domestic capital alongside foreign investment. He suggested that pension fund regulation should shift from focusing solely on cost to considering the long-term return. This shift could encourage pension funds to take more risks and support the growth of UK startups.