Friday, March 25, 2011

I think the UK Government is listening to us

Following hard on the heels of the Home Office's announcement relating to Entrepreneur visas, this week's budget had a distinctly enterprise supportive flavour.

I had very much hoped this would be the case and certainly the signals coming out of the Department for Business (in the shape of Mark Prisk - who attended Seedcamp's SeedSummit for a full hour and half), the PM in his Tech City announcement and No10's enterprise task force including treasury officials, gave one hope.

Government has the loudest megaphone in the land and once they 'discovered' Silicon Roundabout at Old Street it moved swiftly into the vernacular and the media have been making regular trips east ever since.

Its easy to be cynical when it comes to politics but I do believe we have a tech friendly Government determined - and able - to keep Britain as the best place to start a business in Europe.
I have reason to believe too, that the personal pressure which David Cameron has applied to Google, Facebook, Cisco and co to heavily invest in Tech City is being taken very seriously by those companies.

The details of the budget are well covered elsewhere but its worth summarising some of the key points which will directly impact early stage technology companies and entrepreneurship.

1. Expansion of Entrepreneurs Relief:  limits capital gains tax to
10% on business sales under certain conditions. The “lifetime” limit on capital gains which can qualify for entrepreneurs relief  will be doubled from 6 April to £10 million.

2. Changes to the Enterprise Investment Scheme
offers income and capital gains relief for investors in growth businesses.
The rate of income tax relief on EIS investments will rise from 20% to 30% from 6 April 2011.
This means if you invest £100,000 in a qualifying company, you immediately benefit from an income tax
deduction of £30,000. ..and the qualifications and type of shares are to be made much simpler and wider - limits now to 250 employees rather than 50. The annual allowance for individuals doubles to £1m

3. Corporation Tax:

The main rate of corporation tax will be reduced from 28% to 26% from April 2011.
The rate will then be reduced by a further 1% in each of the following three years, giving rise to a corporate tax rate of 23% by 2014. This will give the UK one of the lowest rates of corporate tax in Europe.
The small profits rate of corporation tax will fall from 21% to 20% from April 2011.

4. R&D Tax Credits:

There is a major boost in the Budget for small businesses investing in research and development. The rate of relief on qualifying R&D expenditure rises to 200% from April 2011, with a further increase to 225% from April 2012.

All in all there has never been a better time for start-ups in the UK!

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Wednesday, March 23, 2011

UK Budget - not all bad for Entrepreneurs

With thanks to Graeme Burnham of Complete Tax Solutions .....[the comments in italics are mine]
The highlights extracted from the Chancellor's 2011 Budget are as follows:

· Corporation tax rate is reduced to 26% [for those making profits]
· EIS relief will increase to 30% from 20% [Great boost for Angels]
· Entrepreneurs relief lifetime allowance has doubled to £10m [Excellent news for founders]
· Non-domiciles may be able to remit income/capital gains without
charge if invested in qualifying businesses [haven't examined the detail but this could bring a lot of non - dom cash into the eco-system]
· The business rate – relief holiday for small businesses will be
extended to October 2012 [All helps]
· Small businesses (less than 10 employees) will face less
regulation [must be good - again, lets see the detail]
· The small companies R&D tax credits will rise from 175% to 200%
to 225% [Excellent!]
· Short life asset allowance to increase to 8 years from 4 years 
· National insurance will (at some point in time) be combined
with income tax
· Gift aid will be simplified and administration will be taken
· A 10% reduction in the inheritance tax rate if 10% of a legacy
is given to charity to be implemented in April 2012

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Tuesday, March 08, 2011

London is a magnet for talent -update

London collage.Image via Wikipedia
March 16th: UK Government introduces new visa rules ..... http://goo.gl/rKfOc

At a recent meeting at Fizzback, I became aware of the large number of non-Brits on the team. They may be an exception because after all they do a fair amount of semantic analysis using natural language processing in half a dozen languages but 38 out of a total of 66 Fizbackers were born outside of the UK. 
That's 58%.

The non-UK nationalities represented are:


That's pretty impressive - don't you think?

Looking around the London office of Index, there are only 6 British born - out of a total complement of 18.

At a time when Governments around the world are pushing for enterprise, start-ups, small businesses and technology to lead their economies back to health, its more important than ever that talented people who want to participate in a country's economy are encouraged and allowed to come.

Organisations like Seedcamp and SeedSummit have been lobbying the UK Government to make non-EU Visas easier to obtain to allow this very phenomenon to flourish. This is important and I hope that the strong words that the PM is using about enterprise and growth extends to ensuring that talent wanting to come to the UK will find it easy to do so.
[update, 16th March 2011 ...

Government 'rolls out the red carpet' for entrepreneurs and investors ...http://goo.gl/rKfOc ]

Just this past week, Techcunch ran a story entitled "Why Silicon Valley Immigrant Entrepreneurs Are Returning Home"

London clearly has some extra-ordinary pulling power despite the weather (which by comparison with many places is not that bad anyway)....and is producing some super companies. Saul wrote an interesting piece on this a couple of months ago.

The Prime Minister, David Cameron said yesterday: "Where there has been an aversion to risk, there needs to be boldness.
"I'm telling you today that your job under this government is not to frustrate local people and local ideas, it is to enable them."
If the Government can follow through on this rhetoric and continue to foster and develop an enterprise culture, there is no reason why London will not continue to be the startup capital of Europe.

If you have some stats on % of non-Brits in your London based startup, let me know.
Perhaps someone needs to pull together a comprehensive data set.

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Saturday, March 05, 2011

Best Practice - series

Yesterday morning - March 4th - I received the fist of the monthly stats packages from a TAG portfolio company - for analysing February's results. In the next day or two, I'll get the full set of management accounts - P&Ls, Balance Sheet, commentary, the works. That's really good.

That same morning, I received the accounts package from another profitable and well run company - but for January.
It made me think about the very privileged position I have in being able to compare and contrast and draw conclusions as to best practice across a whole range of companies at different stages, with different priorities.
Having made more than 70 early stage investments in my 15 years of active investment, there is a certain pattern recognition which emerges and which I'm going to attempt to crystallise as 'Best Practice Tips'.

The best way to disseminate these - in the hope that they'll be useful to some - is to 'tweet a tip' every day.

The output will not be organised in sections or subject heads - nor will they necessarily follow logically one to the other but will be randomly put out - as they occur.

Two tweets have already gone out 'on test' - and I intend persisting with them as long as people are commenting.
Sometimes the 'best practice tip' (bpt) will be tough to get into 140 characters without being too obtuse or cryptic, in which case, deck.ly will do the job.

The 2 tips put out thus far are:
Tip1: know your cash balance every day
Tip 2:Get management accnts out by 10th of month,closing KPIs on the 1st. So Feb KPIs ar… (cont)http://deck.ly/~VZ17o 

Want to keep getting the best practice tips? Follow me on Twitter ... @robinklein
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