Policy 14: Devise a coherent regional startup strategy
In collaboration with The Coalition for a Digital Economy (Coadec), we have produced a manifesto to make Britain the best place in the world to start and grow a business. It features 21 policies across three key policy areas: access to talent, access to investment, and regulation. We’re sharing the policies on our blog. To read the full manifesto, click here.
There has been a growing disconnect between central government and regional tech ecosystems. The needs and requirements of startups in the UK’s wider regions are very different to those situated in London and the South East. Yet there has been a tendency to force top-down reinvented initiatives upon regions which can be detrimental to the local ecosystem.
The investment landscape across the UK is not uniform and private investment varies from region to region. This is because emerging and innovative funds lack a network of peers and mentors outside London, which increases the perceived risk of investment. Unlike London and the South East, startups in the wider regions rely heavily on public-backed investment funds. Although some tech clusters have sought to move to a privately financed model because public funds have not proved agile enough, this disengagement from public funding risks leaving large parts of the sector underserved.
To mitigate this risk, we must start to build a nationwide network of peers and mentors outside London for emerging and innovative VC funds to tap into. The British Business Bank’s UK Finance Hub should partner with Capital Enterprise to create a network that could highlight both best practices, and also practices that could be risky for emerging funds in the long run. This would instil confidence in regional investments, enabling emerging funds to unleash capital outside London.
But investment alone brings less benefits than when it is combined with business support initiatives, especially in newer, more emergent ecosystems. It is widely felt that Local Enterprise Partnerships (LEPs) across the country do not understand, and are not always responsive enough, to the needs of the tech sector. Future investment schemes should consider ways to ensure that investment and support are intrinsically linked.
Similarly the digital skills shortage is felt very acutely in the wider regions and it cannot be resolved with a ‘one size fits all’ approach. Intervention has to be targeted, and funded, to deliver for individual regions. The issue needs to be overcome by understanding what is happening at a grassroots level in terms of skills.
The next government must devise a coherent regional startup strategy that is led by a grassroots up approach, developing more networks and infrastructure to share best practice between tech clusters, to bridge the disconnect. This will ensure policy initiatives are targeted rather than mere reinventions from other geographical areas.