The United Kingdom is facing challenges in keeping globally relevant tech firms within its borders, as highlighted by Warren East, former CEO of Rolls Royce and Arm, during a tech event in London on June 13, 2022. East emphasized the need for a mindset shift within the investor community to enable British technology businesses to succeed on the international stage.
The Issue of Commercialization
East, who led Arm between 1994 and 2013, pointed out that the U.K. has been struggling to effectively commercialize technology businesses on a global scale. He noted that there have been criticisms regarding lackluster growth and poor rates of GDP per head in the U.K., which he described as a source of national “embarrassment.” East highlighted the tendency for firms that achieve scale in Britain to either relocate outside the country or list abroad in countries like the U.S. due to challenges in achieving global relevance from the U.K.
In his keynote speech at Cambridge Tech Week, East expressed his belief in the potential of U.K.-based innovative technology. However, he acknowledged that there is a disconnect between the innovation being generated in the U.K. and the successful commercialization and exploitation of that innovation on a global scale. He emphasized the need for the U.K. to enhance its commercialization efforts to retain and grow its tech firms within the country.
Challenges in Scaling Up
East highlighted the common narrative of innovative products being developed in Britain but then being commercialized and exploited elsewhere in the world. He pointed out that the U.K. needs to focus on getting the commercialization process right to prevent the loss of valuable technology and intellectual property to other countries. East acknowledged that there is no easy solution to this issue but emphasized the importance of fostering a greater risk appetite to support the growth of high-potential tech firms in the U.K.
He noted that while the U.S. has deeper pools of capital and a higher investor risk appetite, the U.K. lags behind in terms of supporting the scaling up of its tech businesses. East highlighted the need for regulatory changes that would enable more investments from sources like pension funds into startups and stimulate risk appetite within the U.K. entrepreneurial ecosystem. He expressed optimism that there would be progress in this area in the coming years but cautioned that businesses cannot afford to wait for regulatory changes to occur.
Impacts of Globalization on British Tech Firms
The globalization of the tech industry has had a significant impact on British tech firms, as exemplified by Arm’s decision to list on the Nasdaq in the U.S. last year. Arm, known for its chip architectures found in most of the world’s smartphone processors, remains majority-owned by Japanese tech giant SoftBank. The company’s move to list in the U.S. dealt a blow to U.K. officials and the London Stock Exchange’s ambitions to attract more tech debuts within the country.
East’s remarks underscore the challenges faced by British tech firms in competing on the global stage and the need for the U.K. to enhance its capabilities in commercializing and scaling up technology businesses. The shift in mindset advocated by East reflects a broader need for the U.K. to adapt to the changing dynamics of the tech industry and create an environment conducive to the growth and success of its tech firms.
In conclusion, the challenges in keeping globally relevant tech firms in Britain are multifaceted and require a concerted effort from various stakeholders, including investors, regulators, and the entrepreneurial community. By addressing issues related to commercialization, scaling up, and global competitiveness, the U.K. can position itself as a hub for innovation and technology excellence in the global market. Warren East’s insights serve as a call to action for the U.K. to embrace a new approach to supporting its tech ecosystem and ensuring the success of its technology businesses on the world stage.