10 Reasons To Start Up In The UK

The UK is increasingly seen as a hub of entrepreneurship comparable to Silicon Valley or the US East Coast. It’s never been a better time to launch a startup in the UK and here’s why.

1. Corporate careers aren’t what they used to be

Imagine embarking on a career at Tesco or Barclay’s in your first year after graduation; it will be years before you’ve risen to a level at which you can claim to own a part of the business.

At a startup you may have equity as well as a salary, making you a part-owner of the business.

Diana Proca, founder of WorkInStartups, describes the motivation as: “having an actual impact on the business that you work for, influencing it in a significant manner.”

She goes on to suggest that the corporate career ladder is not as secure as it once was:

“Corporations cannot offer financial security in this time of crisis, as they will discharge employees each time the business needs it. The current crisis made an impact on the corporate world and showed us that corporations are not as strong as we thought they were.”

2. It’s never been cheaper to set up a startup

Technologist Lachlan Donald, the CTO of 99designs, an internet marketplace for graphic designers, recalls how difficult it used to be to set up the technology infrastructure for a startup:

“I remember playing all those guessing games. I spent weeks trying to negotiate different kinds of deals with internet hosting companies: could we have two servers for the first two months, then six for the next two, not really being sure what we would need.

“Companies had to borrow a lot of money to buy all those servers. It created a barrier to entry that cloud computing has removed.”

When he helped to launch 99designs, using Amazon Web Services to run the website, the company was set up without any external funding at all.

Entrepreneur Andy Yates, director of Huddlebuy.co.uk, the daily deals site for entrepreneurs, explains how much prices have fallen in the UK:

“Setting up a limited company in the UK is much easier than it used to be – with prices starting at just a £5

“Next any self-respecting business these days needs a website – but you don’t need to be a technical genius to create your own. The first step is getting a website address…prices can start from a couple of pounds a year…website services cost as little as £6 a month

“So now you should be ready to take on the world – without it costing the earth. It has never been easier and cheaper to get a business off the ground.”

3. In the UK entrepreneurs are “the new rockstars”

Nowadays students go to universities not wanting to join a band or become a DJ but to own their own startup, and in the UK entrepreneurs get recognition all the way up to the top of society.

As Jamie Cooke at the RSA puts it:

“A recurring theme amongst our politicians, particularly in the trying economic environment we find ourselves in, is the need to encourage and foster more enterprise and entrepreneurism. Entrepreneurs are lauded as heroes, possessing the skills, talents and raw enthusiasm to drag our economy out of the abyss and back to the happy days of endless growth.”

4. Strength of regional development funds

The UK is fortunate to have in place a strong network of regional development funds.

Scottish Enterprise aims to Generate £150 million – £250 million of capital investment by companies through its Regional Selective Assistance (RSA) grants.

Finance Wales makes commercial investments in small and medium-sized businesses throughout Wales, managing funds of more than £387 million.

And Invest Northern Ireland has created five funds totalling more than £100 million to ensure that early stage companies with high growth potential are not held back because they cannot access finance.

5. Startup Britain’s regional champions to help you across the country

StartUp Britain is a national campaign by entrepreneurs for entrepreneurs, harnessing the expertise and passion of Britain’s leading businesspeople to celebrate, inspire and accelerate enterprise in the UK.

The campaign was founded by eight entrepreneurs and launched on 28th March 2011 by the Prime Minister, with the full support of the Chancellor and HM Government.

Its nationwide reach is enabled through its StartUp Local campaigns, for which there are now over 70 StartUp Local champions running StartUp Campaigns across the country. These programmes are designed to ensure that wherever you are starting up around the country you have access to expertise, small business tools, and a support network to help you get up and running.

6. World-class incubators/accelerators

Seedcamp has been set up by some of the best-connected investors in Europe and its network of mentors includes development advisors from high growth tech startups, including Google, Facebook, Ebay and Paypal.

Down the road, at Springboard, over 50% of the starts up who enter have succeeded in raising capital in the next round of funding.

Startups around the UK also have access at their doorstep to Innovation Warehouse, Google Campus, TechHub, and LeanCamp, providing a whole ecosystem of support networks and access to finance.

7. Presence of the technology giants

In September 2011 Google opened a multimillion-pound ‘technology community centre’ in London’s East End, as part of the government’s plans to create a Tech City in the capital.

July 2012 saw Facebook open a London engineering office calling the city a “perfect fit”, with a “vibrant local startup community with lots of great technical talent.”

And in Sep 2012 Yammer, recently acquired by Microsoft for $1.2bn, announced a move to larger premises in the heart of London’s Tech City as a result of the growth of the EMEA team and addition of a new developer centre, the first located outside the San Francisco headquarters.

Georg Ell, EMEA general manager for Yammer, said:

“This move is a significant sign of the appetite for enterprise social networking and collaboration tools in the UK and EMEA at the moment. Yammer arrived in London just 16 months ago and already we have grown the team from three to 85. Also, the new developer centre is a signal of the company’s commitment to Tech City and continued investment in Europe and the UK in particular.”

All the world-class engineering talent swimming around these companies is surely an asset to UK startups.

8. Presence of top Venture Capital firms with active funds

The UK Venture Capital community has backed some of the most iconic startups over the last decade and continues to raise new funds to support the next generation of entrepreneurs.

As well as investing in Rovio and Facebook, Accel Ventures has backed UK startups Etsy, HailO, and Wonga; Index Ventures has invested in Betfair, Glasses Direct, Just-Eat, and Playfish; and Balderton Capital has backed LoveFilm and Zopa amongst many others.

In June 2012 Index Ventures announced a new €350m seed fund to invest in early stage innovation, so there’s plenty more money going into the UK startup ecosystem.

9. The Seed Enterprise Investment Scheme (SEIS)

The SEIS is a tax break launched in April 2012 for UK tax payers to encourage them to buy shares in startup companies registered in the UK.

SEIS investors can input £100,000 in a single tax year rising to a maximum £150,000 over two or more tax years in to a single company, so long as they do not control the company receiving their capital.

Investors pick up 50% tax relief in the tax year the investment is made, regardless of their marginal rate, which gives a huge incentive for angel investors to put some of their investible capital into UK startups.

10. The UK entrepreneur visa scheme

The UK has a Tier 1 visa specifically for:

Non-European migrants who want to invest in the UK by setting up or taking over, and being actively involved in the running of, a business or businesses here.”

This effectively means that if you or one of your co-founders is originally from outside the EU then you may still be able to set up in the UK by applying for access through the UK Border Agency as an entrepreneur.

The exact and up-to-date terms and conditions should be checked at the UKBA website, but to give an example of the criteria for scoring enough ‘points’ to be able to apply for the entrepreneur visa, this condition would give you 25 points towards a required total of 75 (as of August 2012):

(a) You have access to not less than £200,000, or

(b) You have access to not less than £50,000 from:

(i) one or more registered venture capitalist firms regulated by the Financial Services Authority,

(ii) one or more UK Entrepreneurial seed funding competitions which is listed as endorsed on the UK Trade & Investment website, or

(iii) one or more UK Government Departments, and made available by the Department(s) for the specific purpose of establishing or expanding a UK business

  • To ‘Presence of top Venture Capital firms with active funds’ I would add Crowdfunding equity, as this was the main reason I’ve developed a startup in UK recently.

  • John Advard

    These are valuable reasons for startup in UK. I think main reason is that UK government provides proper growing chances to all as entrepreneurs and investors.
    Enterprise Investment Schemes- https://www.wealthme.com

  • Laura-fromstudenttostartup

    Interesting post! About the second point “It’s never been so cheaper to set up a startup” – I wonder how much a UK startup usually spend to launch the business in the very first months. I find it really hard to find data about this.