Tech firms: it’s scaling up not starting up which is the challenge
The biggest challenge faced by entrepreneurs in technology is not starting their company, but being able to scale it up.
That’s according to Dr Mark Payton, the CEO of investment group, Mercia Technologies PLC. He was speaking to more than 200 tech companies at Manchester Town Hall.
“Scaling up is the real struggle. Rather than holding businesses back, we need to work with the owners to build value over time. That doesn’t mean five years, it may take seven to 15 years to create a sustainable business. More capital is now becoming available for early-stage businesses, but finding scale-up funding is still very difficult,” he explained.
“However the issue is not simply with funding at different stages, there are also significant challenges for tech business located outside of London. Around £3bn of investment capital is deployed in London and the South East but as you go further and further towards the North, the amount decreases dramatically. This isn’t a reflection of the quality of ideas, but the lazy way in which capital is deployed.”
He pointed to figures which showed that the UK was one of the most successful countries in the world at creating start-ups, but it ranked just 13th in its ability to scale them.
“High-calibre managers used to shy away from early-stage businesses but that has changed, as experience from our own portfolio shows. We are now building some very impressive management team and boards on our portfolio companies,” he continued.
“While the political focus is moving away from globalisation towards a more local agenda, in the era of Trump and Brexit, I am confident that the young UK entrepreneurs coming through will grab the opportunities and find ways to benefit from the disruptions ahead.”
The comments came at Celebrating Tech 2017.