The co-founder of venture capital investment platform Accelerated Digital Ventures has called on the government to put the foundations in place to help the tech ecosystem thrive.
Andrew Sloane is ADV’s investment lead for Scotland and the North West. The former corporate lawyer believes that government should create the right space and conditions for companies to grow – then take a step back.
“When you see government initiatives – whether national or local – try to build these ecosystems, they never work,” he told BusinessCloud.
“It has to come from the bottom… it’s about making sure the conditions are right to help that organic stuff happen.
“The ones that don’t work out are the ones where the government wants to control what it happening. Give the tech ecosystem as long a leash as you can – and let it grow from the bottom up.”
Sloane spoke to us at the headquarters of Manchester-based cloud firm UKFast before leading a Tech Manchester workshop there focused on raising equity funding for start-ups, which was attended by investors and start-ups alike.
Tech Manchester is a not-for-profit organisation backed by UKFast, which was founded by Lawrence and Gail Jones.
“You need to build those resources, like Lawrence Jones has done here,” explained Sloane. “The Skyscanner guys have been building the tech ecosystem out in Edinburgh for the last ten years.
“There are great smart founders and people who will find a way to build it, so allow them the space and conditions to do it. You can accelerate the building of them, but you need the companies to get involved – it always works best from the bottom up.”
ADV invests patient capital in digital tech businesses from the start-up to scale-up phase. Its UK-wide portfolio of more than 20 businesses includes the likes of Push Doctor, WeFarm, Mindtrace, B Secur and Chargifi.
“Outside of London it is often a challenge to raise the type and level of capital that can help you along that pathway to that big vision you started with,” Sloane said. “Venture grade capital is very concentrated in London – and those guys don’t get out of London very much.
“There is a growing angel community in the North West, with some institutional-type capital, but it’s quite fragmented: there are little pockets and silos. It will come together as it matures.”
ADV invests alongside its fund partners and understands that it can take 10-20 years to build what it refers to as a ‘Scalebig’ company. It also encourages its companies to learn off each other.
“Traditional VC funds have a fixed-term life to them as the fund has to be returned to the investors at the end of a ten-year period,” he explained.
“You have to largely sell the businesses you’ve invested in, which means generally selling them off when they are medium-sized to usually Asian or US corporates.
“They get swallowed up and disappear into those corporates… we want to open up a pathway that allows companies to transcend that traditional exit point.”