I’ve been in the UK for more than 25 years, but I grew up in California and our business at DN Capital spans the Atlantic – so I have a perspective on some of the differences in attitude and approach across both sides of the pond, and one of the big ones is that people in UK tech can sometimes be less optimistic than their US counterparts.
The economic narrative around the UK hasn’t been very positive for a while now and this is no different in tech. Reading the UK press, you come away with the impression that the country is lagging behind the US, China and elsewhere when it comes to tech and that the AI revolution might leave the UK behind.
There are absolutely challenges facing UK tech – equity capital markets could and should be more supportive of growth companies, as my colleague Steven Schlenker recently wrote high energy costs mean we’re unlikely to see many foundational LLMs being developed in the UK, and there are regulatory burdens that inhibit growth, especially in certain sectors like ag tech.
Having been an investor for more than 25 years, here’s where I think some perspective helps rebalance the narrative.
The UK has some of the core elements of a vibrant tech sector that are extremely hard to replicate: fantastic universities that are doing genuinely world-leading research, robust talent pipelines including the ability to attract and retain talent from all over the world, and deep benches of investor, founder and operator talent. The UK also has one of the best regimes for options – a crucial part of how startups incentivize and reward talent – in Europe.
25 years ago, there essentially wasn’t a tech ecosystem in the UK, at least not in the way we recognize it today. It sounds made up because we take for granted the amazing raft of UK tech businesses that now exist, as well as the fact that nearly all of the world’s largest tech companies have significant presences in London and around the country, but it’s true. In 2000, a tech-savvy young graduate leaving a top university and looking to build a career in tech would have had to relocate to California. These days, there’s a pipeline to all kinds of rewarding tech careers in the UK: join a tech giant, launch or join a startup, become an investor, freelance or consult – the pay packet might not stack up against the numbers on offer in California, but the opportunity is there.
DeepMind and ARM are often held up as symbols. Both founded in the UK, they were snapped up far too cheaply in the case of DeepMind, and chose to sell off and was subsequently listed in the USA in the case of ARM.
Pessimists say they show everything that’s wrong with UK tech: regulatory barriers, an anti-entrepreneur mindset, and shallow capital markets shepherding UK tech crown jewels overseas. I’d like to present the counterfactual: these are both fantastic businesses that have changed and are changing the world through deep tech, and there’s very few places in the world they could have been founded at all.
At DN Capital, the venture capital firm I co-founded in 2000, we currently have six live UK investments covering everything from pet insurance to home energy decarbonization, and across all of them there is fantastic technical talent, entrepreneurial drive to succeed, and a desire to apply deep technical expertise to solve real challenges.
The UK is also well-placed as a bridge between Europe and the US, offering access to both markets, regulatory environments, and talent pools. This is particularly important in emerging areas like AI, where we see significant opportunities in the application of LLMs to agentic workflows and automation - areas where the UK’s strong research base and technical expertise give it an edge.
We also think some of the most exciting opportunities in AI lie in the application of AI to enterprises and real problems, and this is an area we expect the UK to excel in – you don’t need low energy costs to achieve this, this is the bread and butter of great startups: spot an opportunity, build the tech, and bring it to market.
The UK is a fantastic place for tech. It could be made better, but let’s not let pessimistic rhetoric undermine real potential. The same is true for Europe more broadly—there are still challenges, and plenty that can be improved, but we shouldn’t be too defeatist. The foundations for success are here, and with the right mindset and support, there’s no reason the UK and Europe can’t continue to build world-leading tech businesses.