An investigation has started into how Britain can produce more ‘unicorns’ – start-ups valued at more than $1bn – and how they can be kept here rather than being sold to overseas buyers.

Sir Peter Gershon’s (chair of the National Grid) review has been commissioned by a group of business leaders rather than the government, with the support of the Cabinet Office.

It follows Lord Hill’s recommendations on relaxing the London stock market’s listing rules and former Worldpay boss Ron Kalifa’s report on fintech – both designed to help the UK attract more tech ventures post-Brexit. Separately, Boris Johnson has asked science minister George Freeman to analyse the barriers to scaling up promising companies in the biotech sector.

The review, chaired by Gershon, is expected to look at how Britain  can try to create the next Amazon or Tesla, and why successful pioneers such as chip designer ARM Holdings and AI start-up DeepMind were sold to Japanese and US investors respectively at relatively early stages in their growth. In particular, it is likely to explore the gap in scale-up funding available, and whether Mifid II solvency rules could be adapted to help insurers funnel more money into start-ups.

Nigel Wilson, chief executive of the FTSE 100 giant, Legal & General, may be among figures asked to help with the project. Wilson has been vocal about the need to plough more defined contribution pension-fund money into long-term infrastructure and science.

This month the City watchdog activated the reforms recommended by Hill, allowing founders with ‘golden shares’ into the premium part of the stock market and lowering free float requirements from 25% to 10%.

Gershon, who previously chaired Tate & Lyle, is well know in Whitehall, having led a review of public-sector efficiency for Tony Blair and Gordon Brown in 2004.

The UK Unicorn landscape

In June this year the UK tech sector reached new heights with 100 UK tech companies valued at $1bn or more, according to data from Dealroom and Tech Nation.

Collectively, the UK’s 100 tech unicorns have raised almost $32bn (€28.9bn) in VC investment, across multiple tech sub-sectors, including e-commerce, insurtech, and cyber security and energy. 34% of UK tech unicorns are fintech companies, 14% healthtech, 8% travel and transport tech, 5% foodtech and 4% gaming. 

The UK now joins the US and China as the only nations to have triple digit tech unicorns globally, and is the first country in Europe to reach 100 tech unicorns, with more tech unicorns than Germany (42), France (22) and the Netherlands (18) combined.

These high levels of tech unicorn creation reflect the continued strength of the UK tech sector, which reached record highs in the first half of this year.

Is it possible for a start-up to become a unicorn?

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  • The real objective is to develop the tech to a point where it can be sold and let someone else exploit its true potential.

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Source: Sunday Times Business