As the tech startup ecosystem continues to thrive globally, the choice of jurisdiction from which to launch or base operations from can significantly influence a company's success. From Silicon Valley to Silicon Roundabout and beyond to wider regions, the UK has established itself as a powerhouse for tech startups.
With increasing competition for such business, we briefly highlight some of the UK’s primary attractions while also providing a nod to competing incentives in Singapore, Hong Kong, and Ireland.
UK advantages
- Access to capital: The UK offers ready access to capital with a well-developed venture capital ecosystem and a robust network of angel investors. London, as a global financial hub, has long since attracted substantial investment for tech startups. The government funded start-up loans programme offers low-interest loans alongside mentorship and support for early-stage startups.
- Talent pool: With continued and increasing focus on science, technology, engineering, and mathematics (STEM) disciplines, the UK continues to produce a steady stream of talented graduates and specialists who contribute to the innovation and growth of tech startups.
- Government policies: The UK government actively supports the tech sector through various initiatives and policies, including grants and funding programs, to foster innovation and research. One such example, the UK-wide Future Fund seeks to ‘super charge’ this sector through investment in research and development (R&D) to help build a future economy, create skilled jobs, and cement the UK’s status as a scientific superpower.
- Business environment: The UK’s business-friendly environment is characterised by its stable legal system, strong intellectual property protections and transparent regulations. This environment enhances investor confidence, attracts international business and aides the promotion of innovation and entrepreneurship. The UK is also home to several prominent and innovative tech accelerators that provide support, mentorship, and resources to help tech startups grow and scale their businesses.
- Taxation: Among a broad range of benefits in this area, tech startups engaged in qualifying R&D activities can claim tax relief on eligible expenditures, resulting in availability of additional funds for growth. The Enterprise Investment (EIS) and Seed Enterprise Investment Schemes (SEIS) are tax relief initiatives designed to encourage investment in early-stage companies. These enable private investors to access generous tax breaks arising from investment in qualifying UK startups, again, making it easier for tech startups to secure funding.
- Global talent visa: The Global Talent Visa programme enables the brightest and best worldwide tech talent to come and work in the UK's digital technology sector. This programme provides a streamlined process for obtaining a visa, making it easier for talented international entrepreneurs and tech professionals to relocate, work and establish their own startups in the UK.
Singapore, Hong Kong, and Ireland:
While the UK offers numerous advantages and support beyond those referenced in this article, our clients have the benefit of accessing wider tech incentives through our global offices, with some examples outlined below.
- A Research, Innovation, and Enterprise (RIE) funding scheme remains one of the cornerstones of Singapore’s national strategy to develop a knowledge-based information-driven economy, offering grants and support for R&D activities, assisting startups to accelerate their innovation and drive growth.
- Hong Kong offers favourable tax rates, access to various government-backed funds intended to boost competitiveness, as well as programmes to support local enterprises use of tech services and solutions. The recently introduced Top Talent Pass Scheme enables graduates from the world’s 100 universities to obtain a two-year visa to work in Hong Kong, without the requirement for a sponsoring company.
- Both Singapore and Hong Kong have long since served as key gateways to Asia markets, offering planning advantages and opportunities as regional hubs for innovation, technological development, and expansions across the region.
- Ireland offers its own range of incentives. The Knowledge Development Box, for example, provides a reduced tax rate of 6.25% on income generated from qualifying intellectual property. Such measures, combined with Ireland’s ease of doing business, competitive tax regime and commitment to EU membership have further enhanced Ireland’s attractiveness in this field.
Conclusion
Despite increasing competition, the UK continues to serve as the blue-chip planning jurisdiction of choice for ambitious tech startups, primarily due to the factors outlined above.
Through a combination of resources and support from governmental and specialist trade associations, such as techUK, alongside the expertise of global start-up and expansion professional service firms, such as Hawksford, the UK and all of its vested tech-growth contributors are well positioned to add further chapters to the UK tech startup success story.
This article featured in The Local Digital Index 2023, compiled by techUK. You can download and read a copy of the full report here.
If you’d like to learn more about market opportunities for tech startups, please contact Gerrard Rafferty and he will get in touch.
