The UK tech disconnect

The UK tech disconnect

UK tech funding research

Silicon Valley hype is turning investors off tech, making it difficult for UK technology firms to secure funding. Tech companies at the lower end of the mid-market are being squeezed as they lack the 'rags-to-riches' appeal of start-ups and cannot command the multi-billion pound buzz of larger corporates, making access to finance is a real issue.

Almost half of UK managers surveyed by BDO say lack of funds is the biggest barrier to growth in the tech sector. Close to three-quarters of companies says they are seeking finance specifically for new product innovation, and 31% expect the paucity of finance to restrict growth over the next five years.

However, venture capitalists, private equity investors and alternative funders have a different take and are urging medium-sized tech firms to make themselves known. In fact, some say there just aren’t enough investment opportunities to go around. “This disconnect between the tech and finance community is impacting the UK's competiveness as the tech centre for Europe – it's hampering innovation,” says Paul Russell, partner at BDO.

Russell calls on government to do more. " A second digital-focused Enterprise Capital Fund and increased public investment into both funds would be a good start, as would a specific innovation credit for technology businesses which would give an R&D type credit to a wider range of technological innovation than under current rules. If we want to create a market where mid-sized tech businesses can develop into global tech leaders in their own right, we need to support them along the way."

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Pixel Lab heads north

Pixel Lab heads north