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On 14 September, Chancellor Rishi Sunak brought British tech founders and investors together at Plexal’s HQ in London’s Olympic Park for his inaugural Treasury Connect event, which celebrated the growth of the UK’s tech industry and explored the many challenges it faces, from funding gaps to digital sovereignty.
As well as outlining what the government is doing to stimulate growth through schemes such as Future Fund: Breakthrough, Sunak called on the sector to share ideas for how we can make the UK the best place to launch, grow and list a tech startup.
Plexal has an idea, and it’s something we’ve been working on for the past 12 months. We need to turbocharge collaboration in the private sector.
Governments are collaborating across borders – Australia, the US and the UK have just signed a new defence and technology-sharing pact, for example. But we need to leverage the research and development budgets of industry and Big Tech to tap into the potential of startups.
The UK’s tech sector has reached a stage of maturity. Megadeals – equity deals of £50m or more – have increased by 10 times since 2011. We now have more than 100 unicorns and a record £11.2bn was invested in UK tech companies in 2020.
We should celebrate this, but we also need to ensure that our tech ecosystem has a steady injection of innovation from early-stage startups that are agile, capable of taking risks and are operating on the bleeding edge of game-changing technology such as artificial intelligence and quantum computing.
Enterprises and global tech companies are hungry to work with startups, and they are tapping on Plexal’s door because they know that doing this is not straightforward in practice.
Enterprises have radically different cultures, processes and timeframes from startups. And in many cases, projects get started without clear objectives or mechanisms in place to protect the financial interests or intellectual property of both parties.
This also includes paying startups for pilots – which doesn’t happen as standard. Collaboration can often end in tears and startups can very quickly run into cashflow problems.
At Plexal, we are helping big tech companies to scour the market to identify the right startups and scaleups to work with. We are also putting the right guardrails in place when it comes to running pilots, building proofs-of-concept and co-creating new solutions – all while protecting intellectual property.
There is a sizeable pot of money sitting with large organisations that can be invested in startups, either through contracts or corporate venture capital. We should be wary of big tech companies becoming omnipresent, all-powerful and dominating the market share. But we also have an opportunity to use the success of our tech sector to create a virtuous cycle and make sure there is a strong pipeline of ideas and innovation.
This can be a powerful addition to existing government investment designed to stimulate particular sectors such as cyber or life sciences, as well as schemes to boost investment such as Future Fund: Breakthrough.
And it’s not just industry that will benefit from this amplified private sector collaboration. As the government’s Integrated Review lays out, it is imperative that the UK maintains and gains technological advantage when it comes to science and deep technology. Startups – especially deeptech startups – have the answers.
The fact is that the investment might of Big Tech is bigger than any one government. On a geopolitical level, it will be nation states that are able to master collaboration between public and private and within the private sector that will see the most technological progress.