Exclusive C-level briefing: Huddle Founder, former CEO and President explains how networking schemes are not enough to create world-beating start-ups.
Mentoring and networking schemes for tech start-ups are not enough without cold hard cash, according to Alastair Mitchell of collaboration company Huddle.
Huddle is one of the founding members of the Future Fifty, and is well-known as one of the UK start-ups that has successfully grown to become an international business.
Now, as the UK becomes keen to develop its tech sector and build more of its innovative start-ups into global powerhouses, start-up support schemes like the Future Fifty are becoming more widespread.
"They’ve helped in all sorts of ways," says Mitchell of the Future Fifty.
"They have a general network that we’ve used extensively. More useful to us has been the introductions not so much to the peer companies because we know a lot of them pretty well but growing our network into some of the parts of governments which is a big part of our business.
"They have good connections into financial institutions, so that’s brought some custom but also advisors. The networking part of it has been very good as well as the validation that comes from being part of the cohort."
However, Mitchell has his reservations. He wants the scheme to become more focused on investment.
"The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) in London drive a huge amount of early stage investment at a very small level. You’re talking an angel putting £25 or £50k into a start-up, so a lot of start-ups have say half a million from a lot of investors.
"The biggest challenge remains that a lot of these investments in start-ups are very small still. EIS and SEIS help small investments but don’t drive the £25 to £50 million rounds that you see in the US.
That’s been an issue for many years and unfortunately hasn’t changed in the time we’ve been in the market."
While Mitchell adds that he is "bullish" about the sector, the lack of a strong investment climate is reflected in a general inability to scale the UK businesses, he adds.
"What you see in the Future Fifty is that the average size is a lot smaller than the counterparts in the US. I think that one of the tricks that was missed a little bit in the Future Fifty is taking the time to build an investment ecosystem that will help them become very big companies. That’s tough and they’ve pushed where they can, and I know they are working to do it.
"But if you’re going to have a government-backed scheme, connecting start-ups is great but it’s really the investment environment that is the single biggest driver of success.
"I’d love to see [the Future Fifty] stepping up again and focusing on building the investment ecocsystem, to help these companies go from being early stage companies to well-funded world-beaters."