TLDR:

• UK struggles to keep globally relevant tech firms
• Former Arm CEO Warren East criticizes UK’s poor commercialization of technology
• Tech companies often move operations or list abroad due to difficulties in UK
• UK needs increased risk appetite and investor support for high-growth tech firms
• Changes to capital market rules could stimulate more investment in startups

The United Kingdom’s technology sector is grappling with challenges in commercializing innovations on a global scale, according to Warren East, former CEO of chip design firm Arm.

Speaking at Cambridge Tech Week, East highlighted the country’s difficulty in retaining and growing tech companies to achieve international relevance.

East, who led Arm from 1994 to 2013, expressed concern over the UK’s lackluster economic growth and poor GDP per capita rates, describing them as a source of national “embarrassment.”

He pointed out that many UK-based tech firms tend to relocate their operations overseas or choose to list on foreign stock exchanges, particularly in the United States.

The former executive emphasized that while the UK has significant potential in innovative technology, it often fails to translate this promise into global business success. “We tend not to be able to realize as many global businesses as that promise would suggest,” East remarked during his keynote speech.

One of the key issues identified by East is the UK’s struggle with commercialization. He noted that a considerable amount of innovation originates in Britain but is subsequently exported and exploited elsewhere. This pattern has become a “common story” in the UK tech landscape, according to East.

The problem, as East sees it, lies not in the startup phase but in the scale-up process. He highlighted the disparity in capital availability between the UK and the US, noting that “investor risk appetite in the US is higher than it is in the UK.” This difference in funding environments can significantly impact a company’s ability to grow and compete on a global stage.

To address these challenges, East suggested that the UK needs to encourage a greater “risk appetite” to support high-growth tech firms.

He mentioned ongoing efforts within the British entrepreneurial and venture capital communities to change capital market rules.

These changes aim to allow more investments from pension funds into startups and stimulate risk appetite in the UK investment landscape.

East expressed optimism about these potential changes, stating, “Fortunately I think we can expect more of that over the coming years.” However, he also cautioned that businesses cannot afford to wait for rule changes and must find ways to succeed within the current environment.

The issue of UK tech companies choosing to list abroad was illustrated by Arm’s recent decision to go public on the Nasdaq in the United States. This move was seen as a significant setback for UK officials and the London Stock Exchange, which have been working to attract more tech company listings.

East’s comments come from a position of extensive experience in the UK tech and engineering sectors. Beyond his tenure at Arm, he also served as CEO of aviation engineering giant Rolls-Royce and currently holds a position as a non-executive director at Tokamak Energy.

While East acknowledged that he doesn’t have a “silver bullet” solution to the UK’s tech commercialization challenges, his insights highlight the need for a shift in mindset and policy to better support the growth of technology businesses in the country.

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