The pressure of being a unicorn company, a private start-up firm with a valuation of more than a billion dollars, can be immense. Vishal Marria, founder of London-based Quantexa, which uses AI to manage financial risk, likens the pressure to that of a football player with a big transfer fee. Despite this, fewer UK tech bosses are experiencing this pressure due to the drop in financing from venture capital (VC) firms, whose interest in start-ups has fallen as interest rates have risen. The Tech Nation report suggests that, correspondingly, valuations have also decreased, leading to fewer unicorn companies.
According to Dealroom, the UK formed 36 unicorns in 2021, but that number fell to 20 in 2022, whereas in the US, 44 unicorns were created in the same period. Germany, meanwhile, formed just four unicorns in 2023. David Moore, CEO of Cambridge-based computer chip manufacturer, Pragmatic Semiconductor, puts the slower UK total partly down to the lack of expertise and capital among UK investors, particularly for “deep tech” companies whose technologies or products are more complex. The US’s wider pool of capital and experience has led firms to move abroad if necessary.
Marria, along with other tech founders, believes the UK has unique strengths, including top universities and a strong finance sector. However, they suggest a cultural difference compared with the US, where greater ambitions and risk-taking are encouraged, with investors readily providing large sums of money in a bid to secure quick returns, while UK investors tend to minimise risk. The culture of creating mega-scale companies, rather than merely new ones, needs to be supported and developed in the UK, they argued. In the meantime, Marria recommends documentation of a vision, a focus on problem-solving, agility in the face of change and the importance of entrepreneurs “owning the process” of raising funds
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