There’s a special kind of dinner that I host every few months at a certain place, a members’ club in Soho, where you can bring more than three people without being interrogated, in this case a certain British tech founder.
At the end of his thirties, he is already on his third successful venture. In total he has raised more than £180 million in venture capital. He currently employs around 220 people in London, with another fifty to be hired in the next twelve months. Last week he sold another $40 million tranche of his Series C to two American funds.
And he told me between his second and third glass of red wine that he was moving the company headquarters to New York. Not on principle. Not on taxes. Not on regulation. Not even to the Chancellor, despite the obvious temptation in this column. He’s moving because the next $200 million he needs in 18 months is in New York and the practical day-to-day life of a CEO, with his monthly trips to a city eight time zones away from his kids, is frankly too painful. So he moves the family. The London office will remain. Over time it becomes smaller. By my count, some version of this conversation has taken place in the last two years with at least twelve British founders that I know personally.
Britain has no starting problem in 2026. We start off exquisitely. Internationally, we have more new technology companies per capita than almost any other developed economy. Cambridge is in itself one of the world’s great clusters. London’s software and fintech ecosystems are deeper than Berlin’s, deeper than Paris’s, and by most measures comparable to New York’s, with a few exceptions. We have excellent universities, a functioning tax incentive system in the EIS, a meaningful angel community and a steady flow of seed and Series A capital.
What we have is a stay-at-home problem.
The numbers are visible if anyone bothers to look. UK technology IPOs account for less than 12 percent of US IPOs in terms of market value, adjusted for relative GDP. The UK Series C rounds and subsequent rounds are dominated by lead American investors in terms of number of deals. The proportion of British technology companies founded in 2018 that have relocated their headquarters abroad, to the USA, to Delaware, to Ireland or to Singapore by 2025 is now over 22 percent. The proportion of all UK-founded unicorns listed on the New York Stock Exchange or Nasdaq rather than the London Stock Exchange has exceeded 80 percent over the last decade. Eighty.
Why? Despite the city’s lobbying efforts, this is not primarily a tax issue. American capital gains rates are in no way more founder-friendly than British ones. Despite numerous discussions in the Ministry of Finance, this is not a corporate tax issue. The U.S. corporate tax rate is comparable when you combine federal and state tax rates. Despite the political sentiment, this is not a regulatory problem in the key technology sectors; the FCA, where it counts for fintech, is a much friendlier regulator than its American counterpart.
It is primarily a problem of depth of the capital pool. The UK pension system invests an embarrassingly small proportion of its £3 trillion in assets in growth-stage UK stocks, despite the most visible efforts of the Edinburgh Reforms and the Mansion House Compact, as well as half a dozen subsequent initiatives. Statistically, Canadian pension funds are more heavily invested in British scale-ups than British pension funds. This is the absurdity of the current situation: the ninth largest pension industry in the world, based in the UK, is not investing in British growth and is being invested in British growth capital on a larger scale by Canadians, Australians and Americans.
Correct the depth and the rest of the problem largely goes along with it. There are about three things to do. Firstly, bring the UK’s defined contribution pension funds, which incidentally are growing by over £100 billion a year, into a properly structured UK scale-up vehicle with a sensible target allocation and appropriate governance overlay. Second, restore the London Stock Exchange’s pre-2008 status as a competitive listing venue for technology companies by reforming the dual-class share structures and listing rules architecture that bogged it down in the era of utilities and miners. Thirdly, ensure that initial phase EIS benefits are permanent, generous and straightforward so that initial capital remains the easiest tier to raise.
None of this is impossible. None of this is particularly daring, even in an international context. The Australians did most of this in 2008. The Canadians did most of this in 2014. The Singaporeans built theirs in about six years. We’re still thinking about it in 2026.
And in the meantime, my Soho friend will be leaving in the fall. He will take the family with him. He will retain the London office. The American round is closed. The next British unicorn, and there will be a next British unicorn, will land in New York again along the current route. The mayoral candidates will all denounce the loss of “Brand London” the day after. And the bottle of red wine will be uncorked by someone else in our special Soho members’ club.
We are off to an excellent start in this country. We just have to finally learn to keep them. It turns out that May locals aren’t the only ones on the ballot.
