UK 'appallingly bad' at start-up funding

Investors need to take a long-term view when backing new tech start-ups in the UK according to leading fund manager Neil Woodford, speaking as part of the BBC's Tech Talent coverage.

He says small companies are not receiving the funding required to grow.

"We have been appallingly bad at giving those minnows the long-term capital they need," said Mr Woodford.

On the BBC, Tech Talent coverage is asking whether the UK can compete in the global tech industry.

The UK is a magnet for entrepreneurs - around a third of them come from abroad.

But according to Mr Woodford and others, home-grown tech entrepreneurs are not turning promising starts into leading global companies.

Rory Cellan-Jones: Has the UK got Tech Talent?

Mapping the UK's digital clusters

What's wrong?

On Monday the BBC will look at the vibrant and growing UK tech scene and ask why it has failed to find a Google or Facebook.

A variety of reasons have been put forward, including a digital skills shortage, a lack of leadership experience and difficulties in raising finance.

At least, it seems, generating good ideas is not the issue.

"We have four of the top ten universities in the world, 29 of the top 200. We do science and research really, really well in the UK and we're generating lots of little companies," Mr Woodford said.

According to him, it is after this stage that the problems emerge.Mr Woodford argues that UK investors are too short-term and don't have the scale to support small technology firms.

Hussein Kanji, co-founder of Hoxton Ventures agrees: "It would still be hard for something like an Uber to be born out of the UK because I don't think there's a financing community that would give Uber the billions of dollars that it has consumed to get to global stage," said Mr Kanji.

Others point out that Silicon Valley has had longer to perfect the process.

Eileen Burbidge has worked at Apple and Yahoo and is now a venture capitalist based in London.

"They [Silicon Valley] did have an ecosystem that was cultivated in the 1940s and 1950s frankly by the US government and the defence industry that were originally in that part of California," Ms Burbidge said.Mr Woodford also believes that UK entrepreneurs have been too quick to sell out once the business gets going.

Not so, according to Taavet Hinrikus, chief executive and co-founder of London based peer-to-peer money transfer service TransferWise.

His company has become what is known as a unicorn - a company set up since 2000 which is now valued at more than $1bn (£770 mn). There are fewer than 20 in the UK.

He said he would not sell-up at the moment.

"We're just getting started with the company so why should we stop now? What would I do? I'd go on the beach for a day and then I would become incredibly bored and I would have the same urge to change the world for the better. I think starting over would be going backwards," Mr Hinrikus said.

Academic drive

Another theory is that universities aren't being supportive enough.

"We haven't been as opportunistic, adventurous and entrepreneurial as others," said Annalisa Jenkins, boss of Dimension Therapeutics, a gene therapy innovator.

"In the past academics have traditionally viewed success, quite rightly, as their ability to publish their research in leading journals... the notion of turning their inventions into innovations that really drive value for people hasn't really been rewarded and recognised in terms of the culture of our country in the last 20 to 30 years," Ms Jenkins said.

You can listen to the packages containing these interviews on the Today Programme on Monday. Technology correspondent Rory Cellan-Jones, economics editor Kamal Ahmed and North America technology reporter Dave Lee will all be involved in the coverage of why the UK seemingly cannot match Silicon Valley.