This article was published on January 3, 2013

The shape of 2013 for UK startups

The shape of 2013 for UK startups
Jamillah Knowles
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Jamillah Knowles

Jamillah is the UK Editor for The Next Web. She's based in London. You can hear her on BBC Radio 5Live's Outriders. Follow on Twitter @jemi Jamillah is the UK Editor for The Next Web. She's based in London. You can hear her on BBC Radio 5Live's Outriders. Follow on Twitter @jemimah_knight or drop a line to [email protected]

The New Year is upon us and most hungry startups are back at the coal face, if they took a break at all over the festive season. So what is there to look forward in tech business and trends for 2013?

What are the more practical hopes for startups and tech around the UK? TNW asked a selection of thought leaders, startups and technologists what they would like to see happen in the coming months and for their take on this year’s trends.

Screach, a company based in Newcastle upon Tyne created the Screach app which works between a smartphone and other digital screens to manage content.

Screach CEO Paul Rawlings feels that mobile will become the first thing on a company list for development.

“It’s such an important part of how we digest content and interact with each other now, and you’ll definitely see a rise in people designing with the mobile experience in mind, in many cases over the traditional desktop format.

Naturally being a company that works with all sorts of screens large and small, the multiple platform way of seeing is something he feels will mature. “It’s the year that we learn if second screen fulfils its potential or not,” he says. “It’s been discussed as the next big thing for broadcasters and brands for a little while, but the people who are operating in that space are still experimenting to get an idea of what works best.

Rawlings also notes that expansion and support in the UK for startups needs to continue. His company has been rolling out ScreachTV at home and in the US through 2012 and hopes to continue to grow overseas.

“We’re very interested in how a startup gets in front of the right people in major markets like America. The work of UKTI in organising missions to America is great for businesses like ours, and we’d welcome other moves to improve opportunities to trade and build contacts abroad.

“It’s also important that Britain continues to invest in its connectivity. We can’t fully embrace the shift toward mobile if we’re constantly gasping for signal. The UK needs to focus on making fast, reliable mobile connection available in as many areas as possible as soon as possible, supplemented by broadband and WiFi. And we’d give our right leg to be able to get online consistently during a train journey.” Let’s hope that commitment is not necessary by the end of this year.

Collaborative investment

Individual companies naturally have hopes that are close to their own hearts when it come to the future. But investors and angels often have a broader idea when it comes to gazing into the short-term crystal ball.

Alysia Wanczyk is the Marketing Director with Seedrs, the online platform for investing seed capital. Given the nature of her business, it’s no wonder that she has a firm belief in fresh funding methods over the next 12 months.

“We believe that 2013 will be the year of equity crowdfunding. Entrepreneurs will increasingly look online, leveraging their own personal networks and social savviness, to raise equity capital as a first resort – with early-stage businesses looking to the “crowds” before they even consider approaching a bank or offline investment firm.”

Of course that plays well to a platform like Seedrs, but Wanczyk has a keen eye for the shift in financial investment and that this may no longer be the work of a small percentage of the business community but that it could become democratised to the point where many of us might consider adding to the pot of something we believe in.

“More and more people will see investing in startups as a mainstream, far more enjoyable way to grow a portion of their investible capital. With decreasing returns seen from traditional savings accounts, the increased popularity of peer-to-peer lending, reduced transaction costs and appealing SEIS tax reliefs offered to UK startup investors – experienced offline angels and nascent investors are as ready as ever to develop their own portfolios and support great entrepreneurs, online.” So maybe your money could be put to better use outside of your bank account.

Government support

Government support for small businesses in the UK is not to be sniffed at either. Late in 2012 we saw Angel CoFund celebrate an extremely lucrative year with 18 investments backed by the government.

Eileen Burbidge, partner at Passion Capital also sees the value in government support. “We were extremely fortunate and had a fantastic 2012 backing 10 new startups during the calendar year. None of that could have been possible if not for the strong support from our UK Government partner, Capital for Enterprise, manager of Enterprise Capital Funds. Capital for Enterprise named 2 new Enterprise Capital Funds in 2012; Notion Capital and Longwall Venture Partners. We hope they continue to partner with even more in 2013.”

Eileen’s considerable experience in the tech sector and current work among startups in London’s White Bear Yard puts her in a prime position when it comes to trends for the coming year.

The idea of technologies maturing also cropped up on her list of hopes. “Social, but not just for social’s sake. It’s more about making it useful, personal from an empowerment but also ownership point of view as well as being relevant and actionable.

Burbidge also sees a continuation of last year’s trends as they become more mainstream. “There will be continued relevance for ‘Quantified self’,” she says. ““Real-time’ will continue to be more and more essential and innate rather than just a bolt-on to existing businesses.”

The integration of newer technologies to more established industries will also become stronger according to Burbidge, “We’ll finally see the last standing “old skool industries” modernized with online efficiency. From luxury wines and academic research to dental care and education.”

Startups speak up

Businesses from the Passion portfolio also had interesting things to say about the development of their own and other businesses in the year ahead. Jozef Wallis, Co-Founder, SVP of Toothpick feels that business essentials could do with a change, “To support and encourage us, a better understanding of UK Tax Credits and similar UK Government grants and initiatives would be useful,” he says.

Adnan Ebrahim, Founder and CEO of Car Throttle says that one of the shifts that will be too big to ignore is the ever-growing mobile sector. He noted, “The shift to mobile devices for media consumption is showing no sign of relenting. Building a solid mobile strategy in 2013 will finally become a necessity for all startups, and not just an afterthought.”

James Maskell, Founder and CEO of Vinetrade proposes a shift in thinking for UK startups. “People need to be less pessimistic and more confident,” he says. “There seems to be a greater awareness of startups in the UK and support for people giving it a go – but the culture is often quite negative. I’ve got family members who criticise me for not having a stable job and are itching to say “I told you so” if it doesn’t work out!”

Maskell also feels that financial obstacles need to be removed in order to encourage businesses to grow. “I’d love to see greater disruption to banking and payments,” he says. “This has been one of my biggest headaches and likely will continue to be. Banks seem to be universally awful and little interest in dealing with small players. Lots of regulation makes it difficult to get merchant accounts – and when you do it’s tough to do the integration work. Basically we need someone like Stripe to launch in the UK.”

The strange juxtaposition of old and new industries still appears to be a friction point for small companies in the UK. Gareth Knight, Founder and CEO of Wedo feels that older sectors from the state to the media could do with catching up.

“I don’t think government and big institutions know how to deal with startups that are disrupting, and for most of them they are too risky to touch. What would be a great encouragement is more media coverage of startups which reach certain thresholds.My team finds being in the press a great motivator,” he says.

Although some government support has garnered praise for supporting startups, there are some who feel there is plenty more work to be done.

Naimish Gohil, Founder and CEO for ShowMyHomework says, “In 2013, I’m hoping the UK Government is going to give startups more opportunities to win contracts. I’m excited by some of the work happening already and hope it filters through to education soon.”

The qualified self

Indeed through education there may be a chance for more home-grown talent to find their place within the startup ecosystem. But it has been highlighted repeatedly that there is a real need to support learning in this sector in order to fill roles that are begging for the right people with the right skills.

“The lack of candidates for tech jobs in the UK is becoming too big a problem to ignore,” says Andrew Hunter, Co-Founder of Adzuna, the job search engine. “In 2012 over 1.1m tech jobs were posted in the UK and there simply isn’t enough qualified, home-grown talent to meet this surge in tech vacancies. We need to be training more developers, we should be getting smart graduates excited about joining startups over banks and serious government investment should be put against developing tech skills in young people.”

The dearth of UK talent is a frustration that many startups lament. Victor Henning is the co-founder and CEO of Mendeley, the global research platform based in London and he also sees a problem that may be better solved by trying to attract qualified candidates from overseas. But this too is not without issues.

“Our biggest bottleneck remains hiring the right talent, which often resides abroad and outside the UK,” he says. “Arcane Home Office rules like the Labour Market Test or the recent English language proficiency certificate, have cost us months in bringing developers and data scientists into our London office. Hence, our biggest need is easier access to talent and visas.”

Changes in legislation would also foster growth according to Henning, “The implementation of the Hargreaves recommendations (The Review of Intellectual Property and Growth/Digital Opportunity in the UK), will make it easier for digital startups like ours to grow our business in the UK, rather than via subsidiaries abroad”. he says. “In both of those matters, we have appreciated the direct link to Downing St No 10 through the Tech City Breakfasts and the Tech City Advisory Board. I hope this contact intensifies in 2013 with Joanna Shields at the helm of Tech City.”

Women leaders

With more women like Joanna Shields making headlines in the tech press, the impact of women in the sector is also an area of hope. Aisha Yusaf of The Super Times, notes that the topic of female tech innovation has been a hot one.

“This has been an interesting year for women in technology and as a woman tech business founder myself even more so,” she says. “There have been some heated debates on the Internet alongside some useful questions being asked about how women are represented, treated and paid in the profession.

“There are more women founding tech companies and I hope this will be a growing trend as it’s great to have companies founded by all representations of society – women, men, the old and young.  Diversity of business founders creates a diversity of business types,” Yusaf continues.

“As a new mum, starting a new business in 2012 I would personally like to see more support and funding in this area. The reality is that it is very difficult to get investment in this position and government support for mothers in the UK is very much geared towards getting back to work rather than entrepreneurship. I think it would be great to see help for this large and growing demographic of parents to get into tech business as it’s such an exciting space.”

The UK Government expressed hope that Britain would be a great centre for science and technology and with the enthusiasm and expertise of the people quoted here and the many other startups and investors around the country, there’s hope that the idea may succeed.

Ezequiel Vidra, Head of Google Campus also sees that a task has been set that needs to be followed through, “In 2013 London needs to continue the momentum that Tech City and Campus built in 2012,” he says. “This means greater density of network, a stronger startup community on a national level and providing founders with support for growing their startups in the UK whether it includes securing access to skills, talent or funding.  We made great strides to put London on the startup map in 2012, now it’s time to build on our solid base.”

Strengthening and highlighting work outside of the capital is a good start to help things along, with hubs in Manchester, Newcastle, Cambridge and other cities already setting a great example, maybe the trend for entrepreneurship in tech will finally filter through to the mainstream.

Drawing on the themes here, better support from the government, supporting women and parents in startup culture, putting mobile at the top of your list and hauling older industries into line with digital practise look to be some of the ideas we will see in 2013.

The best thing about asking startup founders, investors and those who support this sector is that they are the ones most likely to make it all happen.

Image Credit: Sam Yeh / Getty Images

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