Key Takeaways
- • The Financial Times calculates that 300 British companies were sold to foreign buyers, mostly American, over the past decade, according to a Guardian editorial citing the FT.
- • The thinktank Common Wealth's paper "We Aren't the Champions" argues UK venture capital prioritises investor exits over building domestic tech champions and social value.
- • The LSE's Nils Peters and David Kampmann find US and European incumbents gained from the exit of 38 major UK VC-backed tech firms between 2010 and 2023, spanning AI, fintech and biotechnology.
- • The paper contends that injecting pension fund capital into startups, as Rachel Reeves proposed as chancellor, risks inflating sale prices without securing British ownership or control.
- • The authors advocate democratic control over innovation and industrial policy modelled on India, Ethiopia and Brazil, where public investment and procurement built domestic capacity.
Summary
Britain continues to sell its most valuable technology companies abroad. According to the Financial Times, as cited in a Guardian editorial, 300 companies were acquired by foreign buyers, mostly American, over the past decade. The Guardian's editorial board frames this as a policy problem, drawing on a paper from the thinktank Common Wealth titled "We Aren't the Champions," which critiques the UK venture capital industry.
The paper argues that the UK's startups are often sold before reaching scale. DeepMind, founded in London in 2010, was acquired by Google just four years later. The authors describe a circular dynamic: the UK lacks large technology firms capable of acquiring successful startups, and selling those startups overseas perpetuates that gap. Research by Nils Peters and David Kampmann of the London School of Economics attributes significant gains to US and European incumbents from the exit of 38 of the largest UK VC-backed tech firms between 2010 and 2023.
The conventional view holds that startups struggle to grow because they lack capital, which prompted Rachel Reeves, as chancellor, to encourage pension funds to invest in UK assets. The Common Wealth paper contends this could backfire by inflating eventual sale prices without securing British ownership. The paper also links the profit-maximising model to social costs, arguing it has favoured surveillance technologies, from wearables to AI chatbots, and exploitative gig platforms.
The editorial endorses Gordon Brown's position that Britain should retain ownership of its innovations, while distinguishing financial returns from industrial development. The paper proposes democratic control over innovation with investment directed towards social purposes. It cites India's publicly funded space programme and Ethiopia's state-owned airline as examples of sustained public investment building domestic capability. It also highlights Brazil, which tied universal healthcare for 215 million people to industrial policy through public purchasing, laboratories and technology transfer; by August 2021, almost three-quarters of Covid vaccine doses administered had been produced domestically.
The paper argues that the UK's startups are often sold before reaching scale. DeepMind, founded in London in 2010, was acquired by Google just four years later. The authors describe a circular dynamic: the UK lacks large technology firms capable of acquiring successful startups, and selling those startups overseas perpetuates that gap. Research by Nils Peters and David Kampmann of the London School of Economics attributes significant gains to US and European incumbents from the exit of 38 of the largest UK VC-backed tech firms between 2010 and 2023.
The conventional view holds that startups struggle to grow because they lack capital, which prompted Rachel Reeves, as chancellor, to encourage pension funds to invest in UK assets. The Common Wealth paper contends this could backfire by inflating eventual sale prices without securing British ownership. The paper also links the profit-maximising model to social costs, arguing it has favoured surveillance technologies, from wearables to AI chatbots, and exploitative gig platforms.
The editorial endorses Gordon Brown's position that Britain should retain ownership of its innovations, while distinguishing financial returns from industrial development. The paper proposes democratic control over innovation with investment directed towards social purposes. It cites India's publicly funded space programme and Ethiopia's state-owned airline as examples of sustained public investment building domestic capability. It also highlights Brazil, which tied universal healthcare for 215 million people to industrial policy through public purchasing, laboratories and technology transfer; by August 2021, almost three-quarters of Covid vaccine doses administered had been produced domestically.
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