New-look Britain must embrace innovative entrepreneurs and start-up

This article first appeared in the The Sunday Telegraph on Sunday 12 February 2017

Haakon Overli is founding partner of Dawn, an early stage venture capital firm investing in start-ups across Europe

The Prime Minister’s vision for a post-Brexit Britain is one that few people could disagree with. The real question is how we achieve her ambition to create a “truly global Britain” that is “a secure, prosperous, tolerant country — a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead”. Whether we voted leave or remain, all of us now have a responsibility to help draft the blueprint for Innovation Britain.

That will not be straightforward. One challenge that Theresa May will need to confront early on is that the voices of the innovators are often drowned out by special interest groups with years of experience in sophisticated lobbying operations. The entrepreneurs now driving the economy of the future in dynamic areas such as FinTech are creative, commercial and committed to delivering exciting new products and services; but they have little experience in making their case to Government. As the Prime Minister seeks to cut individual deals with the European Union on behalf of our established industries — traditional financial services, for example, or motor manufacturing — she must not overlook the needs of entrepreneurs and innovators.

So, if given the opportunity to make their case direct to Government, what would our entrepreneurs look for in the final Brexit settlement?

For one, a workable immigration solution. It is imperative that we continue to welcome talented people to this country in order to strengthen and build on our home grown digital capability and we must therefore make it easy to recruit them. If we really are to “get control of the number of people coming to Britain”, we must be certain that the mechanism for doing so is not a complicated visa system that only large companies have the resources to deal with. It should be as simple for a small start-up business to source value adding talent from overseas as it is for a blue-chip FTSE 100 company.

And let’s be clear it is not all negative — we should be prepared to embrace the significant new opportunities that Brexit will create. To take just one small example: the Prime Minister has stressed the unique capabilities of Britain’s intelligence services; why not capitalise on those with a UK equivalent of the Americans’ In-Q-Tel?

In-Q-Tel is effectively the venture capital arm of the CIA. Its responsibility is to identify businesses with new technologies and the entrepreneurial thinking to solve fast moving threats that their intelligence agencies are not set up to do; and, not only does it buy from these businesses, it also takes long-term investment stakes in them. These businesses get ongoing funding and the opportunity to benefit from the confidence of such a prestigious customer.

Back home, the European Union’s State Aid rules make such initiatives almost impossible. But Brexit frees the UK from those regulations. There is nothing to stop the intelligence agencies developing their own versions of In-Q-Tel; in fact, every arm of Government that requires new technologies to improve its operational effectiveness could do something similar.

Indeed, public procurement more generally represents a golden opportunity for Government to support entrepreneurs and start-ups as they seek to shape the world. Despite ministers’ admiration for innovation, the departments they preside over — and the broader public sector — still predominantly buy goods and services from the largest providers. The case for shifting spend to smaller and younger organisations rests not only on the need to nurture innovation but also on the quality and flexibility of what IS available; the software-as-a-service model offered by so many dynamic start-ups, for example, offers huge advantages to organisations stuck with legacy IT issues and layers of complexity built on top of one another with each new upgrade. This approach would provide increased flexibility, enabling Government to liberate itself from long term contracts, which very often fail to deliver and invariably go over budget.

This is not to suggest that our best hope is to compensate start-ups that are losing out on international opportunities post Brexit with increased domestic trade. It is vital to ensure that these entrepreneurs are provided with a crystal-clear framework for selling their services across the European Union and beyond.

In fact, negotiating such a framework for our technology companies should not be difficult, as long as it is made a priority. With little supply chain to speak of — especially compared to, say, manufacturing– these businesses care less about issues such as tariffs, even if issues such as regulatory equivalency may be a consideration in some cases.

The bottom line is that all of this is up for grabs — but the Government will need to do that grabbing for entrepreneurs and innovators as much as for established traditional industries. It’s no use saying, as the Prime Minister has, that Britain can continue to be “one of the best places in the world for science and innovation” unless you have a plan for ensuring that is the case. Mrs May must now take the time to listen to Britain’s innovators, represent their interests and harness the new opportunities that Brexit will create.