The UK is appallingly bad at helping start-ups, claims Neil Woodford, the UK’s leading fund manager.
Speaking to the BBC, he said: “We have been appallingly bad at giving those minnows the long-term capital they need."
You may of course respond, by saying “okay, Mr I Am So Clever Woodford” why don’t you put your money where your mouth is? Well, he does and he has! Woodford Investment Management’s portfolio includes the Woodford Patient Capital Trust fund, which, to borrow words from Woodford, invests into a “mix of exciting, disruptive early-stage and early-growth companies.”
Indeed, Woodford, via the Patient Capital Trust, is one of the leading investors into UK start-ups.
He said: “The limited number of success stories here in the UK have generally sold out early." He continued: "This comes back to the capital problem. These businesses that have been successful and may have reached a couple of hundred million market value, have been under pressure from their shareholders to sell out.
"That's principally because of the time constraints on the kinds of capital that institutions have been able to provide to those businesses, so they have been forced to sell out… and haven't had the choice to stay domestic and access more capital to become the multi-billion-dollar company that they had the potential to become."
Maybe Arm is the latest example of a UK firm selling out too early – the Cambridge-based company which grew out of Acorn Computers sells chips that sit in most smart phones and tablets world-wide and may well provide the technology to make the Internet of Things possible, and yet it sold out to Japanese company SoftBank earlier this year.
Here is your question for the day?
We keep hearing about how the UK needs an industrial strategy, but should it support its steel industry, and car manufacturing – or maybe what it really needs to do is back technology start-ups? Does there need to be a cultural change, one that the UK government may need to deliberately orchestrate; such that big thinking, and ambitious start-ups are celebrated – rather than given a myriad of reasons why their plans won’t work?
A good starting point to changing this cultural attitude is to welcome immigrants of a more entrepreneurial nature – which actually, when you consider how risky migration is, – is most of them.