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Peter Cochrane's Hard Drive 2000 Silicon Valley's investment in a month beat the UK's for a year OVER the past 25 years, I have worked and consulted inside the US and grown to admire many features of America's business life. In particular, the amount of time spent researching, analysing and planning businesses, which seems excessive by European standards, turns out to be a lynchpin of success. Their healthy venture capital sector coupled with a philanthropic networking of people, ideas, support, and a willingness to have a go, is even more essential. In Europe, failure is a social blight, while it is seen as a positive qualification and worth a considerable amount second time round in the US. Before anyone goes off on a mental tangent about the efficacy of the American system, the reality is that like any society, everything is far from perfect, but Americans do create 27pc of the GDP (gross domestic product) on the planet. On the other hand, Europe - with twice the population - creates only 20pc. How come? Well, there has to be more to this than a greater number of public holidays. It requires some radical factors to create such a large difference. On both sides of the Atlantic, I see similar levels of business and technology competence, and people working with similar vigour. The big differences seem to be freedom from high levels of direct and indirect taxation, freedom of action, movement and communication, with a strong entrepreneurial spirit and supportive investment. The UK fosters twice as many new business starts per capita than the US, but the failure rate is disastrous. How do such failures arise? On this evidence, we have enough people ready to get up and have a go, but are they preparing the ground with sufficient rigour? Is there sufficient depth of business and product research, development, marketing and sales? Do businesses achieve adequate funding levels fast enough? Are banking, legal, taxation and regulatory aspects as supportive as they could be? The answer has to be "no" on all counts. A large number of businesses go under because they have insufficient funds to tide them over the first very critical years, and it might be possible to correct this in the short term. In one month last year, more money was ploughed into Silicon Valley, in California, than the whole of the UK for the year. Moreover, in the US they think in terms of millions of dollars for a 30pc stake, while in the UK it seems to be hundreds of thousands of pounds for 70pc. It is impossible to match that kind of competition, and the right kind of money has to be high on our agenda. The good news for the UK though is that America is suffering an educated people famine. There are more than 160,000 high-tech and more than two million low-tech vacancies, and the economy looks set to level out. America's economy is limited by people, and there is a growing appetite to invest abroad - particularly in the UK where so much is almost the same. Everywhere I go in the UK, I see great technologies, ideas and people with enthusiasm, drive, and a desire to succeed. I am pleased to say that, with a growing band of hardworking US and UK-based volunteers, we have been able to realise a dream. It is the biggest-ever Venture Capital Business Start Up conference in the UK, with more than 700 seats and 20 big American venture capital funds totalling more than $15 billion (£10 billion) looking to invest. Peter Cochrane holds the Collier Chair for the Public Understanding of Science & Technology at the University of Bristol. His home page is: |
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