New research has found that more tech start-ups in the UK went public or were bought in the second quarter of the year than in any other country in the world, except the US, and accounted for 65 per cent of all merger and acquisition activity in Europe.
However, the number of exits in the first half of this year is down 17 per cent year-on-year and the price tags have also reduced, with more than 50 per cent of tech company exits going for less than $50m.
This may be because they are being pressured to opt for a quick sale so that they can repay their investors rather than hanging on for growth, which is certainly what one of the UK’s most celebrated investors believes.
According to Neil Woodford, who is a passionate advocate of taking the long-term approach to investing, the UK’s funding system is “appallingly bad” at helping start-ups reach their full potential.
He believes that when investors decide to offer cash to start-ups, they often want a return too quickly, meaning that the business is unable to continue to invest in growth.
Speaking to the BBC last week, Mr Woodford said that the start-ups that have been successful have, in his opinion, sold out early in a bid to repay their shareholders.
According to the investor, this a capital problem; typically, the successful businesses that reach a few million in value have been under pressure to sell, principally because of the time constraints placed on those investments.
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