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Kecsmar, who has experienced firsthand the struggles and triumphs of building a tech startup in the UK, offers a sharp critique of the current support available for early-stage ventures. Despite initiatives such as the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS), and R&D tax credits, UK startups face growing barriers to success.
Funding: A persistent hurdle}
For Kecsmar, one of the most pressing issues facing startups is access to funding. “Funding remains a major challenge, with early-stage investment becoming harder to secure,” he says. The numbers support his claim: in 2024, just €16.5bn was invested in UK startups, the lowest since 2018, and much of that went to later-stage companies.
The implication is clear: the funding ecosystem in the UK is increasingly skewed toward scaleups, leaving early-stage startups struggling for attention and resources. “This suggests we’re going backwards in the UK in this regard,” Kecsmar notes. This funding gap must be addressed to allow more startups to reach maturity.
The government could play a crucial role here. Kecsmar proposes partnerships with major tech firms to offer discounted cloud services and AI tools to startups – critical resources for companies in their infancy. Beyond this, tax credits for office space and transport could lower operational costs, easing the financial burden on early-stage businesses.
The benefits of government programs
Despite the challenges, Kecsmar remains a strong advocate for the government’s existing support mechanisms, particularly the R&D tax credit program. “Government programs like R&D tax credits have been invaluable for Antavo,” Kecsmar explains. These credits have allowed Antavo to fund its innovation team, Antavo Labs, which is central to the company’s development of cutting-edge loyalty technology.
The R&D tax credit has allowed Kecsmar’s team to experiment with new ideas without the constant pressure of financial constraints. “By reducing the financial burden of innovation, these credits have allowed us to stay ahead of the curve,” Kecsmar says. “They’ve been key to accelerating our product development and growth.”
However, Kecsmar is quick to point out that these programs need to be more widely available and targeted at the very startups that need them the most. If the UK is to remain competitive, investment in R&D, particularly in emerging technologies, should be increased.
What can be done to help start-ups grow?
Despite the successes of existing programs, Kecsmar is not convinced that the current climate is conducive to fast startup growth. The funding shortfall is just one part of the equation. “We need a more founder-friendly ecosystem,” he insists. The current system, he argues, makes it difficult for startups to access the funding, talent, and support they need to thrive.
The UK must also be more open in terms of talent acquisition. Since Brexit, the movement of skilled workers has been hampered, creating a talent deficit in many sectors. For Kecsmar, solving this issue is critical. “Making it easier for skilled workers to move to the UK would be a game-changer,” he says. Allowing greater flexibility in hiring and immigration would provide startups with access to a global pool of talent, something that is especially crucial in the fast-moving tech sector.
A call for regulatory reform
Beyond funding and talent, Kecsmar highlights the need for regulatory reform. He argues that blanket regulations, particularly in fast-developing fields such as AI, could stifle innovation. “We need reduced AI regulations for startups only, up to a certain size,” he explains. Kecsmar emphasizes that these regulations should still include ethical guidelines and oversight, but the imposition of heavy rules could prevent small firms from competing effectively with their global counterparts.
The UK government, according to Kecsmar, should consider introducing a “start-up exemption” – a form of regulatory flexibility that would allow smaller businesses to operate under more lenient rules, at least during their early years. Such a move could help level the playing field with startups in the US and China, where tech regulations are often less restrictive.
Investing in infrastructure
Beyond policy reforms, Kecsmar stresses that the UK must continue investing in technological infrastructure if it is to remain a global leader in innovation. Cuts to tech and AI funding in 2024 – totalling £1.3bn – have raised concerns that the UK risks losing its position as a top destination for startups. “There’s a very real chance that the UK has already lost some top talent to the US,” Kecsmar warns. If the UK is to remain competitive, the government must reverse these cuts and prioritize investment in emerging technologies.
Kecsmar also proposes tax incentives to encourage the hiring of apprentices and interns by startups. By reducing National Insurance costs for companies that take on young workers, the government could help alleviate some of the financial pressures faced by small businesses while also addressing the skills gap.
Competing on the global stage
Startups in the UK are not only competing with each other – they are up against ecosystems in the US, China, and beyond. The government must understand that UK startups are not operating in isolation. As Kecsmar succinctly puts it: “We need to look at the global stage. Who are startups in the UK competing against, and what are their ecosystems like?”
The UK’s future as a global hub for innovation depends on how effectively it can compete with these other ecosystems. To do so, the government must make bold moves to improve access to funding, reduce regulatory burdens, and foster a more open and competitive talent pool.
The UK has a long history of nurturing entrepreneurial talent, but the landscape is changing. If the government is serious about fostering a thriving startup ecosystem, it must invest more in technological infrastructure, reduce regulatory barriers, and create an environment where talent can flourish. The path forward is clear: better funding, smarter regulation, and a more flexible approach to hiring and innovation will ensure that UK startups remain competitive on the global stage.
As Kecsmar concludes, “A more founder-friendly ecosystem with improved funding access, scalable support, and a more open approach to hiring would help unlock the UK’s full entrepreneurial potential.” Only with these changes can the UK remain a leader in the global innovation race.
