Here’s what our IoT investees want from the 2020 Budget
As new UK Chancellor of the Exchequer Rishi Sunak plans to step out from Number 11 and present the contents of his ministerial Red Box to MPs in the House of Commons on 11 March, Breed Reply has canvassed a select group of its UK-headquartered investees to find out what they want from Boris Johnson’s Conservative government and the Treasury on Budget day.
Dr Simon Kampa CEO of Senseye, the AI and IoT driven maintenance prediction company,
High growth and ambitious start-ups require capital early on in their journey to ensure rapid success and to capitalise on first mover advantage. The institutional investors in the US accept a higher risk profile and will invest in very early stage, pre-revenue, businesses.
The UK institutional investors are more conservative and set the bar far higher. Therefore, schemes such as Enterprise Investment Scheme allow angels and smaller institutional investors to invest in higher risk start-ups while protecting their downside risk.
My company, Senseye, would not now be regarded as the world’s leading predictive maintenance company if it weren’t for timely investment via relief schemes from the government. At best we would now be a niche player.
Alex Cowan CEO of RazorSecure, the cybersecurity company securing systems at the edge, including transport and IoT
We would like to see more funding for innovation in the UK, particularly when it focuses on increasing UK exports.
There is a gap in the UK at the moment, where venture capital-funded companies that have market-changing technology that requires longer to commercialise are penalised and blocked from Innovate UK by the "financial undertaking in difficulty" rules. These rules fail to take into account the actual state of the company, instead using backward looking measures and arbitrary ratios.
On Entrepreneurs Relief, from my perspective it is disappointing that they are removing a mechanism that is designed to encourage Entrepreneurs to take a risk, generate UK jobs, UK exports and power the economy.
This also punishes the employees who take a risk and join an early stage company by reducing the relief on the EMI Share Options schemes, money that would stay in the UK and can be invested in future ventures if they decide to take the same risk again.
This relief is helping to create the next generation of serial entrepreneurs, the type of people who today drive many of the UK's strongest brands and most well-known companies. We should encourage them and give them the boost to invest in their next venture.
Tim Antos CEO and co-founder of Kokoon, the IoT focused health, wellness and fitness company
The government’s support for early-stage businesses through the Enterprise Investment Scheme (EIS), R&D tax credits and Entrepreneurs’ Relief is essential to businesses like ours. Without incentives like these we and many success stories driving economic growth and employment in the UK would simply not exist.
In my opinion rather than adjusting the tax relief schemes, the government could do considerably better with grants. With the loss of the more significant EU grants, such as Horizon 2020, there is a vacuum of funding for longer-term innovation and deep technology. To fill this breach, the government may want to consider reviewing the Innovate grant process, where the administrative overhead can outweigh the limited financial upsides and boost the scope and ambition of these grants in a similar manner to the previous EU grants.
Dan Hubert, CEO and founder of AppyWay, the kerbside management, mobility and parking company
It is safe to say that without the Enterprise Investment Scheme (EIS) AppyWay would not be in existence. There would not be 55 dedicated employees based in central London and there would not be a globally unique mobility SME creating a GovTech platform helping cities achieve ambitious 'Net Zero' carbon goals by reducing car ownership, congestion and pollution.
The appetite for early-stage risk between the UK and US is already stark and our typically British mindset transpires all the way to the top. From my last count, there were a total of 221 companies with unicorn status in the US compared to a very modest 24 in the UK.
The UK is a hot bed of industrial and academic talent bursting with 'big unicorn ideas’, so there is no real reason way we can’t get up the global unicorn rankings. Removing government support of this nature will simply close the wallets of any early stage funding and clip the wings of any ambitious entrepreneur wishing to challenge the norm.