Supporting UK Start-ups: Challenges and Solutions
The United Kingdom has long been a breeding ground for innovation, hosting some of the world’s most dynamic start-ups. However, as new businesses face mounting challenges, Attila Kecsmar, Co-Founder and CEO of loyalty technology platform Antavo, emphasizes that the government must enhance its support to ensure their survival and growth.
Funding: A Persistent Hurdle
For Kecsmar, one of the most pressing issues facing start-ups is accessing funding. “Funding remains a major challenge, with early-stage investment becoming harder to secure,” he states. The numbers substantiate his assertion: in 2024, merely €16.5 billion was invested in UK start-ups, the lowest since 2018, with a significant portion going to later-stage companies. This trend indicates that the funding ecosystem in the UK is increasingly favoring scale-ups, leaving early-stage start-ups struggling for attention and resources.
To bridge this funding gap, Kecsmar proposes that the government form partnerships with major tech firms to offer discounted cloud services and AI tools to start-ups. These resources are crucial for companies in their infancy. Additionally, tax credits for office space and transport could lower operational costs, easing the financial burden on early-stage businesses.
The Benefits of Government Programs
Despite the challenges, Kecsmar remains a strong advocate for existing government support mechanisms, particularly the R&D tax credit program. “Government programs like R&D tax credits have been invaluable for Antavo,” Kecsmar explains. These credits have enabled Antavo to fund its innovation team, Antavo Labs, which is central to developing cutting-edge loyalty technology. The R&D tax credit has allowed Kecsmar’s team to experiment with new ideas without the constant pressure of financial constraints.
However, Kecsmar notes that these programs need to be more widely available and targeted at the start-ups that need them most. To remain competitive, the UK should increase investment in R&D, particularly in emerging technologies.
Creating a Founder-Friendly Ecosystem
Kecsmar stresses that a more founder-friendly ecosystem is necessary. The current system makes it difficult for start-ups to access funding, talent, and support. The UK must also be more open to talent acquisition. Since Brexit, the movement of skilled workers has been hampered, creating a talent deficit. “Making it easier for skilled workers to move to the UK would be a game-changer,” Kecsmar says.
Regulatory Reform and Infrastructure Investment
Beyond funding and talent, Kecsmar highlights the need for regulatory reform. He argues that blanket regulations, particularly in fast-developing fields like AI, could stifle innovation. “We need reduced AI regulations for start-ups only, up to a certain size,” he explains, emphasizing that these regulations should still include ethical guidelines and oversight.
Kecsmar also stresses that the UK must continue investing in technological infrastructure to remain a global leader in innovation. Cuts to tech and AI funding in 2024 have raised concerns that the UK risks losing its position as a top destination for start-ups. To remain competitive, the government must reverse these cuts and prioritize investment in emerging technologies.
Competing on the Global Stage
UK start-ups are competing not only with each other but also with ecosystems in the US, China, and beyond. The government must understand that UK start-ups are not operating in isolation. As Kecsmar puts it, “We need to look at the global stage. Who are start-ups in the UK competing against, and what are their ecosystems like?”
To remain a global hub for innovation, the UK government must make bold moves to improve access to funding, reduce regulatory burdens, and foster a more open and competitive talent pool. By investing more in technological infrastructure, reducing regulatory barriers, and creating an environment where talent can flourish, the UK can ensure that its start-ups remain competitive on the global stage.
