[THE INVESTOR] LONDON -- At a time when Britain’s startups are deeply concerned about losing EU talent following the upcoming Brexit, the UK government is working hard to invite talented startups to join its vibrant ecosystem.
At the fore of this initiative is the Global Entrepreneur Program, a 13-year-old program of the UK Department of International Trade that assists overseas tech startups to relocate to the country.
So far, it has helped around 800 startups join London’s startup scene since its initiation in 2004. It plans to do more, especially in Asia, to scout for the “best and the brightest startups” out to conquer the world.
Derek Goodwin, deputy director of capital investment at DIT
“Silicon Valley is great, and no way can anyone compete with the US when it comes to startups. But I don’t look at it like that,” Derek Goodwin, deputy director of capital investment at DIT and chief of the program, told The Investor in an interview.
“When you’ve got the UK brand and do business across Europe, you will be perceived differently when you go to Silicon Valley,” he added. “We are not trying to take everyone away, but we are an option, a more comfortable option for global expansion.”
Following are excerpts from the interview.
The Investor: What kind of support has the UK government provided to attract entrepreneurs into the country?
Goodwin: The UK government, in the last five years, have given incentives to entrepreneurs. If you are an angel investor and you want to invest 100,000 pounds (US$137,546) to a startup, you pay no capital gains tax or a very small amount. An entrepreneur visa allows people from all over the world to bring in talent and develop their business here. We also help with the visa process for startups.
TI: What can startups take away from the GEP program?
Goodwin: First, you are part of the big GEP alumni community, where you get invited to our events. The relationships with the startups and dealmakers continue as long as you want to. Second, we give workshops on practical subjects and skill developments as well as introduction to networks. For instance, there are workshops on R&D tax incentives in the UK -- so people are aware of the opportunities -- and ways to improve their pitching skills, or how to get Series A funding.
TI: How many Korean companies are in your program?
Goodwin: Korea wasn’t our target market in the early years. We had probably about 10 Korean companies in the last two to three years. The list includes Netalkers, Applied Surface Technology, Ultimate Drones, Clef Innovations and Talent Shop, among others. Our strategic plan going forward is to do more in Asia.
TI: How do you pick startups for your program? What are your evaluation criteria?
Goodwin: The three criteria are market potential, entrepreneurship and innovation. The firm has to have a technology or product that is innovative. The entrepreneur has to be someone who is confident, either immediately or at some stage, to be able to run a business from here. There has to be a market potential behind the product as well. There are lot of people who build solutions and then look for problems. I think it’s best to look for problems and then build solutions.
TI: Are there some key areas you are interested in?
Goodwin: We do all technologies, but we do have a focus on health solutions, like cancer cures, wellness, mental wellness and wearables for heart rate monitoring. We are also interested in AI, smart city, IoT, renewable technologies, platform technology. We also have focus on women entrepreneurs and are trying to bring more of them.
TI: Many Korean firms say they have good technology but face language barriers in entering other countries. Do you think language matters?
Goodwin: It helps if you speak English, but I don’t think it’s a barrier. England is such a multicultural country that you will find people speaking different languages. If the technology is good, you will find someone in the company who can speak English to communicate. In my opinion, technology, business model and the market potential are more crucial.
TI: What is the general investor sentiment like in the UK? Are they interested in investing in Korean or Asian firms?
Goodwin: For investors in general, there is a reluctance to invest in things they don’t know of. American VC firms do have people all over the world looking at investing opportunities, but no other countries do that. Most VC firms tend to invest in companies in their home market, because they have smaller funds. Silicon Valley had 60 years to become what it is, while most of the world had less than 20 years. I think in 20 years’ time, UK VCs will be like US VCs, investing actively in Asian countries. The beauty of what we do as a program is when the companies come to the UK, they become UK companies. Once they become UK businesses, they are here, and can go raise funds because they are perceived by investors as UK businesses, even when they are Asian companies.
TI: French and German governments are also working to attract more startups and funds into their country. What do you think about the competition?
Goodwin: I think a lot of it is because of Brexit. But we have been on a 20 year journey as a country developing entrepreneurship. I think opportunities the UK offers companies are great. We will continue to attract great entrepreneurs. We have always faced competition with what we do.
TI: How will Brexit impact the startup scene in the UK?
Goodwin: The problem with Brexit is that there are many unknowns. But, despite what politicians say, we just carry on. I see as an opportunity for UK and we will continue to attract the best and the brightest, because what we do is about people. It’s not about regimes or regulation. That’s why our clients come to UK, because they want to work with us. They see UK’s sector expertise, the funding availability of the VCs, angel money and a big market of 60 million people. Brexit has a big opportunity for UK because it means we will be able to engage and invest more in other countries, including in Asia, Latin American and Africa, more than just being part of the Europe.
TI: Lots of startups still prefer to go to Silicon Valley first. So why should startups choose UK instead? What can UK offer?
Goodwin: If you are looking at internationalizing, we can help you do that in UK. Then from UK you can go to the US. When you’ve got the UK brand and have business across Europe, you will be perceived differently when you go to the Silicon Valley. We are not trying to take everyone away, but we are an option, a more comfortable option. It’s a great place to start that internationalization process here. If you want to go to the US, go to the US. We are not going to convince you to do anything else. However, if you look at the dynamics, it’s a massive undertaking and it’s really tough to compete with everyone else. But in UK, we would welcome you and help you begin your journey to become an international business.
By Lee Ji-yoon and Ahn Sung-mi
This story was sponsored by the Samsung Press Foundation. The UK Embassy in Korea and KOTRA also contributed. -- Ed.