UK investors warn of regulation risk to tech startups

UK investors are concerned legislation aimed at tech giants could have a damaging impact on startups, a new survey has revealed.

A report published by the Coalition for a Digital Economy (Coadec) found 86 per cent of UK investors believe the principle of designing policy and legislation to target global giants could inadvertently hurt tech startups.

In addition, 76 per cent of respondents thought the overall direction of regulation affecting tech companies is often more reactive than strategic.

London has established itself as a hub for European tech startups over the last decade. But the figures show long-term concerns remain, as Brexit and impending regulation threaten the tech ecosystem.

Executive director of Coadec, Dom Hallas, said: “There are a lot of open questions for the government – from the platform liability to immigration – and not enough satisfactory answers.

“Crucially, investors are clear that a policy conversation about the future of tech dominated by the biggest companies in the world risks squeezing out everyone else, including even our most successful startups and scaleups. This isn’t good enough.”

The survey, which was conducted with Belgian campaign group Allied for Startups, shows venture capitalists remain cautious, despite figures showing the UK is gaining a larger share of investments in Europe.

Data released last month by Octopus Ventures showed the UK now receives 42 per cent of all venture capital funding in Europe, as investors home in on the country’s thriving startup scene.

Allied for Startups director Lenard Koschwitz said: “This survey shows investors are highly conscious that policy decisions and changes, like a unilateral tax or disproportionate liability rules, will impact their decisions, leading to less capital available for startups in Europe.”

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