UK Tech Equities... An opportunity to extract....?

UK Tech Equities: A Tale of Promise, Problems and Missed Opportunities

The UK's tech sector received a huge endorsement recently when Nvidia boss Jensen Huang delivered a rapturous endorsement of Britain's tech community at London Tech Week. Flanked by Prime Minister Keir Starmer, Huang hailed Britain as "the capital of the world" for venture capital and AI.

This kind of 'spontaneous' positive statement is a dream for UK policy makers hoping to establish Britain as a global hub for anything post-Brexit.

However, I think Mr Huang may have been playing nice when next to his PM buddy, given some of the unmentioned problems the tech sector is facing which he kept quiet about!

The Goldilocks Moment?

Huang described Britain's technology sector as something of a Goldilocks scenario — neither too cold nor too hot, but just right for investment and innovation. That is in line with the British government's narrative: that there is a venture capital, university research, and AI start-up ecosystem driving Britain to become one of the world's best places to start and grow a tech business.

The problem is that while optimistic rhetoric resounded through UK tech week, it ended without any multibillion-dollar investments — and that silence is deafening.

A Buyer's Market for Foreign Investors...?

The same week that Huang made his speech, there was a rush of large acquisitions that don't bode so well...

British tech businesses were taken over by American firms at a pace some pundits described as a "frenzy." Alphawave was bought by Qualcomm for £1.8 billion, Spectris issued a £3.7 billion takeover approach from an American private equity firm, and Oxford Ionics — a quantum computing start-up at the cutting edge — was bought by New York-listed rival IonQ for $1.1 billion.

These aren't success stories of British technology going worldwide — they're manifestations of a home market that devalues its own champions, leaving them vulnerable to foreign takeover.

British technology companies are being referred to as part of "bargain basement Britain." Downbeat share prices, a plummeting pound, and lumbering regulatory reform all contribute to reinforcing the idea that UK companies are for sale.

Fintech star Wise sent possibly the strongest sign of concern with its latest move to shift its primary stock market listing from London to New York. One of the UK's biggest tech success stories, Wise's departure should be a cause for alarm. Its move is a protest against the slow pace of change in the City of London and the relatively vibrancy of American markets.

Bankers and investors now predict the UK is "making more money selling businesses than listing them" — short-term profit at long-term cost. This could be devastating for the City from a long-term point of view.

What Needs to Change...?

There are reforms — like pension rule changes to unlock more domestic cash to invest in fast-growing companies, and the government could offer tax relief for new business listings on the UK stock market.

Overall, however, maybe the UK needs a shift in culture: one that encourages growth, taking risks, and keeping successful companies in British hands, a shift in line with the rhetoric we heard at British tech week!

Posted Using INLEO