๐๐พ Hi friends!
Well weโre about a week away from elections in the UK where we may well see a significant shake up in the composition of our parliament. I have found myself becoming fairly vocally critical of whatโs going on in the governance of this country, but rather than yelling into an echo chamber, I thought I would take a look at what impact the various policies from the main parties may have on the startup and venture ecosystem – read on for the breakdown.
In other news, this Thursday, I will be joining a panel hosted by Vertice the cloud cost opimisation platform co-hosted by Pleo the spend management platform to talk about whether Consolidation is the new digital transformation.
Join me and CFOs from some spectacular organisations this Thursday June 27th at 1000 BST / 1100 CEST to dig into how finance is thinking about growth and spend in the tough funding environment we find ourselves in, as well as the impact of new tools and AI on the finance stack now and in the future.
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Iโm well underway writing about all the things Iโve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it ๐.
Now letโs get down to businessโฆ
In this weeks Off Balance:
๐๏ธ Lyuba Guk and David Gilgur from Blue Lake Ventures on Nothing Ventured
๐ฌ๐ง What impact would the various partiesโ policies have on the startup and venture ecosystem
๐๐ผ ๐ฟ๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น ๐ต๐๐บ๐ฎ๐ป ๐ฏ๐ฒ๐ถ๐ป๐ด๐ ๐ฏ๐ฒ๐ฐ๐ผ๐บ๐ฒ ๐๐๐ฎ๐ฟ๐๐๐ฝ ๐ณ๐ผ๐๐ป๐ฑ๐ฒ๐ฟ๐?!
In last weekโs episode of Nothing Ventured, I spoke to Lyubov Guk and David Gilgur, Founding Partners at Blue Lake Ventures, an early stage firm investing and supporting pre-seed and seed stage exceptional immigrant founders in the UK focussed on b2b and software startups.
Prior to founding Blue Lake, David was founder of the VimesVC consultancy in Kyiv whilst Lyuba was a partner at VimesVC. David also spent 6 years at Bloomberg ultimately as a Strategic Account Manager within Data Sales.
Our top takeaways:
โก๏ธ ๐ฅ๐ฒ๐๐ถ๐น๐ถ๐ฒ๐ป๐ฐ๐ฒ ๐๐ฒ๐ณ๐ถ๐ป๐ฒ๐ ๐๐ต๐ฒ ๐จ๐ธ๐ฟ๐ฎ๐ถ๐ป๐ถ๐ฎ๐ป ๐๐ฐ๐ผ๐๐๐๐๐ฒ๐บ: Despite facing desperate challenges, the Ukrainian ecosystem is marked by resilience. The founders from Ukraine have shown remarkable strength and determination in the face of adversity.
โก๏ธ ๐๐บ๐บ๐ถ๐ด๐ฟ๐ฎ๐ป๐ ๐๐ผ๐๐ป๐ฑ๐ฒ๐ฟ๐ ๐๐ฟ๐ถ๐ป๐ด ๐จ๐ป๐ถ๐พ๐๐ฒ ๐ค๐๐ฎ๐น๐ถ๐๐ถ๐ฒ๐: Immigrant founders, especially from Eastern Europe and India, exhibit a strong work ethic, a willingness to take risks, and a drive to succeed. Their diverse backgrounds and experiences contribute to their success in the startup world.
โก๏ธ ๐๐๐ถ๐น๐ฑ๐ถ๐ป๐ด ๐ฎ ๐๐น๐ผ๐ฏ๐ฎ๐น ๐๐ผ๐บ๐บ๐๐ป๐ถ๐๐ ๐ณ๐ผ๐ฟ ๐๐ป๐๐ฒ๐ฟ๐ป๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น ๐๐ผ๐๐ป๐ฑ๐ฒ๐ฟ๐: Blue Lake is working towards creating a super community for international founders in the UK. By fostering collaboration and support among founders from different cultural backgrounds, they aim to create a thriving ecosystem for startup growth and success – check out their International Office Hours 3.0 here.
We also discussed:
๐ How they went from working with SMEs, to launching an accelerator to investing first in Ukrainian immigrants then to all immigrant founders in the UK
โ๐ผ Too many people being pushed into โfounderโ roles
๐ฆ 62% of unicorn ventures across the UK and the US were founded by migrants.
๐ธ๏ธ Building a super community for international founders in the UK
๐ฐ Why VCs need to shut up and stick to investing
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Now letโs get into it.
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Off Balance
As we gear up for the 2024 UK General Election, it’s essential we understand how each party’s policies might impact us.
So I took to the interweb sprinkled with a bit of chatgpt to see what we need to keep an eye on.
๐ Navigating the 2024 UK General Election: What It Means for Startups and VCs ๐
Conservative Party ๐๏ธ
Economic Policies: Cutting NI by 2p could enhance cash flow for startups. However, a legal cap on migration might restrict access to international talent, essential for innovation.
Education: 100,000 high-quality apprenticeships and the Advanced British Standard could produce industry-ready grads, aligning with our tech needs.
Labour Party ๐น
Economic Reform: Wide ranging reforms and green energy initiatives could create new opportunities, though higher taxation might affect net earnings.
Carried Interest Taxation: Labour plans to change how carried interest is taxed, potentially increasing tax liabilities for VCs by taxing it like income instead of capital gains. This could affect investment returns and strategies, making the UK less attractive for investment managers compared to other European countries.
Social Policies: Expanded social safety nets might lead to a more stable consumer base, increasing market potential and share of wallet for tech products.
Liberal Democrats ๐ผ
Healthcare & Mental Health: Investing ยฃ8.4 billion in the NHS might improve employee productivity and reduce absenteeism.
Green Economy: Support for green energy investments creates opportunities for startups focused on sustainability, climate and greentech.
Green Party ๐
Green Economy Transition: Investments in renewable energy and banning fracking open doors for clean tech startups.
Social Justice: Enhanced social programs could expand the customer base for tech products by increasing disposable income across the population.
Reform UK ๐ง
Tax Reduction & Deregulation: Lower taxes and reduced regulatory burdens can boost profitability and attract VC investment.
Immigration Controls: Stricter policies might limit access to the international talent pool.
Key Takeaways
Opportunities: Tax cuts, apprenticeship programs, and green investments are all net positives for reducing costs and encouraging growth.
Clearly, none of these can be guaranteed, and of course, many of the policies have been challenged in terms of affordability though for some of the parties – as they themselves have said – these are the themes theyโre interested in given they wonโt be likely to form a government in the upcoming elections.
Challenges: Immigration caps and higher taxation may restrict talent acquisition and increase operational expenses. Labour’s proposed changes to carried interest taxation could impact investment returns and disincentivise emerging managers.
Equally, whilst these may seem negative on the face of it, one can never be sure of the second order effects that will flow out of these policies though, in speaking with VCs the changes in carried interest are definitely a point of concern. I have long maintained that talent and capital are interlinked, if we see a flight of one, it wonโt be long before we see a potential flight of the other.
Obviously I can’t capture it all, for example corporate tax reform might have an impact on whether you choose to incorporate in the UK or elsewhere. And, equally, I didn’t go into the detail of how viable these policies or reforms actually are (and obviously only one party gets to implement anyway).
All I think we can really say right now is that we are likely to see some changes in the shape of UK PLC post the elections on the 4th of July, and only time will really tell what impact theyโll ultimately have on the ecosystem – one thing is for sure, whilst a rising tide lifts all boats, is the tide goes out, we might just be left with a bunch of rubbish on the beach.
As always, my office hours are open, if youโd like to chat about this or anything else, just grab some time ๐.
I hope you found Off Balance #41 useful. As always, Iโd love to get your feedback and understand the sort of topics you would love to hear about.
Just hit reply to this mail or drop me a line at [email protected] and let me know ๐
๐And thatโs a wrap for this edition of Off Balance – Iโd appreciate your feedback so just reply to this email if youโve got something youโd like to say.
๐จ And if you think someone else might love this, please forward it on to them,
๐ง Finally, if youโre a fan of the Nothing Ventured podcast, please donโt forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.
Thatโs it from me so until next timeโฆ
Stay liquid ๐
Aarish
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