Bloomberg’s Brad Stone and Amy Thomson unveil Bloomberg’s inaugural UK Startups to Watch list, which profiles the smartest and most exciting companies in the country. A selection of the founders will also be invited to speak on a panel discussion about the future of the UK startup scene at the Bloomberg Technology Summit in London.
This was recorded on 10/24/23 at the Bloomberg Technology Summit in London.
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And now we’ve come to the main event, what we hope will be the centrepiece of this annual European edition of our Bloomberg Tech summit. Our goal was to shine a light on what the UK does best to spotlight the scientists, the engineers and the thinkers that this country consistently
Produces and show that it’s not just a sideshow to what’s going on in California. Now, hang on, Amy. This is the UK. Isn’t this the land of overbearing regulation, prohibitive labour practices, a dearth of venture capital and absence of big tech companies? And that’s all before Brexit.
Typical American. As the editor responsible for Bloomberg Tech coverage in the UK and Europe, I find that we’re actually constantly writing about exciting, disruptive companies from the next generation of AI and semiconductors to startups solving problems in health care, cybersecurity and climate tech. The tech sector in our part of the world
Is alive and well. So a few months ago, as we were planning this event, we started thinking about ways to highlight the incredible innovation that’s happening here in the UK. And the result is this list the top 25 UK startups to watch.
This is a real labor of love for the reporters and editors that put this together. In the end, we had more than 1500 companies apply and we were really astonished by the quality of some of the entries. It wasn’t an easy task for our 12 judges
Who came from across the newsroom, from our climate tech vertical green to editors who specialize in finance and health in the food supply chain. Even our bureau chief got involved. They judged these companies based on their innovativeness, their adoption rate, and their potential to make an
Impact. And I really want to thank everybody who was involved with this, including the newsroom apprentices who spent most of their summer toiling over spreadsheets to make this happen. And, by the way, 1500 applications. Kudos to Amy and the team she put together. We really did look at all these
Applications methodically and winnow down this list. So perhaps without further ado, shall we unveil the winners? Okay. Well, in no particular order in the finance category, we have Monzo, a Challenger bank, offering customers access to checking accounts, loans and investments for their mobile zilch buy
Now pay later platform that makes money from targeted ads instead of interest rates. And Gaia, a really interesting insurance firm for IVF, taking the guesswork out of fertility treatment costs. In the enterprise category, we have pragmatic semiconductor, the maker of an
Affordable chip that’s thinner than the human hair and doesn’t rely on silicon. Paragraph the first company in the world to mass produce graphene based electronic devices and chips. Universal Quantum, a company working to build quantum computers capable of tackling real world problems that would
Take today’s fastest supercomputers billions of years to solve synesthesia, a synthetic media platform that content creators can use to generate AI powered videos. We saw a demonstration earlier today, ACSA Building autonomous driving software for industrial vehicles. Peak AI, a firm that helps businesses apply AI to everyday processes like
Inventory management and price setting. SIM Tera, a messaging app designed to especially with complex construction projects in mind. Peak Q Shield, a cryptography company for a post quantum world and quantum Sir, a firm that uses big data, network analysis and AI to detect and prevent
Financial crime and give businesses insight about their customers or consumers. We have only fans. A online subscription platform for creators, which I’m sure you’ve heard of. We have yet to have an audio player of four kids with music games, curated, curated podcasts, that sort of thing.
We have Koala, which makes comfy and affordable prosthetics for adults and kids that can be fitted hours after surgery and has proven particularly useful in war zones. And LV, the maker of a super quiet, hands free breast pump and pelvic floor trainers that have a devoted following
Among new moms in the health category. We have Kema Fei, a firm working to digitize chemistry and revolutionize drug and materials. Discovery Genomics, a company using algorithms and big data to offer insights, preventative health care for clinicians, managing the risk of common diseases and for drug companies developing drugs to fight diseases.
Circuit Magnetics, The maker of a small brain scanner that can fit in a helmet perfect for kids or anyone who has trouble sitting still. That, it hopes, will ultimately have many uses for all kinds of medical imaging. Proximity. A mixed reality tech company offering surgeons a platform to virtually attend
Operations, share insights and train and healing. A pioneer of next gen drug discovery that uses AI to develop new treatments for rare diseases and for companies working to save the planet. We’ve got Big Sis. They produce sterile male insects that control the number of pests around fields. Saving your strawberries without chemicals.
The cycle. A startup recycles precious metals from old electronics with an eco friendly solvent. We have nature matrix which uses DNA traces in the soil and water to measure biodiversity and helps clients track and protect natural resources. And last but not least, Affinity. A company that uses machine learning to
Track how diseases spread through the population and whose tools provided valuable insights during the COVID 19 pandemic. And that’s all 25. Okay. Pleased with all the representatives from the startups who joined us today. Stand and have a round of applause.
So now we want to go a little bit further, and we’ve invited three representatives from the companies on the list to talk about starting a company here in the UK. We have Tanya Boler, founder and president of Elvie. Sarah Crawley, co-founder of Sun Terra,
And Professor Sir Peter Donnelly, co-founder and CEO of Genomics. Welcome. As we’re getting settled, I wanted to throw the first question to the audience. So if we have the the poll question, please. So. Do. There we go. So, congratulations. You’re ready to IPO. Where do you list?
I would love to hear your answer. We’re getting right to the heart of it. And as we’re waiting for the results to come in. Oh, how are each of you thinking about this? As you know, you’re growing your businesses. We’ve got a very different representation from companies that are
Very international to companies that are more local. How are you each thinking through this question, or how would you think through it? Were you were you in that position? Well, Peter and I were actually just saying backstage that there’s a lot of
Bloomberg and finance experts and that we’re offering some of the least qualified people in terms of being able to get it from obviously from a firsthand experience. But I do talk to a lot of banks and advisors. So for Alvy, 85% of our revenues in the
US and I think even more importantly though, we have a strong brand presence in the U.S. So if number one, share of voice in the premium segments. So I think for us it is a real possibility that we could float in the US.
And the reason I say that is more on Sun, I think a lot of British startups have this dream that they should float their, but actually perhaps their business doesn’t translate so well there in terms of brand penetration and so on.
But when we look at it from an LV point of view, I suppose what I’m generally hearing is that the U.S. would be a better place for us when the time is right. And I think that’s partly because we’re part of a new generation. We’re not your traditional medtech
Company, we’re not consumer. So often when we talk to analysts and banks, they don’t know where to put us. We’re part of a new generation of personal or consumer health. And I think the U.S. just has more experience with companies like LV.
So even, for example, Goldman Sachs in New York has a femtech, a women’s health tech analyst, that somebody covering exactly what we do at LV. So there’s a sense that we’d sort of there’d be more liquidity there. And I suppose it would be interesting to hear what the other panelists have.
I have. I suppose the concerns are in the U.K. for tech companies that are quite high growth, but also quite risk taking that perhaps. So I’m trying to be very diplomatic. I just feel bad. I feel like everyone is just constantly so negative about LSC and it’s not entirely else’s fault, right.
As in this other issues in the U.K. and it’ll be interesting to see what the poll says. I think it was pretty decisive. New York had. Yeah. And Sarah, how about you? I mean, is this is it is it that the customers are there or is there a regulatory problem?
Is there an ecosystem problem or an investor problem that makes the U.K. and the European landscape for going public, for getting investment a little less fertile or I think being honest in comparison to Tanya and Peter’s business, why early stage are, you know, so this should be an amazing I still
Have to be quite frank, like, I would love to have this problem. And I think ultimately it comes down to like what’s best for business and being able to compete on a global stage. And when the time comes, it’s, you know, the business will think about what is best for the business.
So I think the landscape will dictate that at the time. Yeah. And Peter, you’ve got a very different business model being in health tech, does that change the way you would think through the problem? Now, I think the broad issues are the
Same in our case as well. Much of our activity and most of our revenue is US based. You know, there’s clearly a greater depth of analytical sophistication there and more capital, which which I think would push one towards the US. I think in the UK
When we’re further along with substantial revenues and so on, the kinds of things that would naturally appeal to investors here. If you’re in a position to be differentiated as Oxford, Nanopore, where then I think that’s an interesting possibility. Peter and Tanya, you’re both innovating in the field of health care.
You know, the regulatory environment a lot different here. You also have universal health care. Is that does that make it easier to innovate in health care, more, more challenging to innovate or to actually build and build the company? Yeah, we were saying a similar thing, what we
Did in the UK and we had the NHS here, which in theory assumes that we have a huge customer base, but it’s very difficult to get traction within that. So for us, for example, our first product, the pelvic floor health product, we got an NHS approved procurement list, which means it can be
Prescribed, but we just found it so bureaucratic and it took too long compared to, say, launching in the US. So our second product category breast pumps, it’s been very easy to get into the health insurance market through through DMS. So for us the scale of the US and
Actually the ease is within that a market is, is superior outside the UK, unfortunately, and Peter’s the scale and the power of the National Health Service, is that a headwind or a tailwind? It’s both in some ways, interestingly, and the UK more broadly.
So on the positive side, we undertook. The first clinical trial in the world of of using genetics to understand people’s risk for all the common diseases and do prevention better. So the first trial in the world happened in the UK. We partnered with the NHS to do that and
It was very successful, which is great in the broadly genetics and genomics space. The UK is very strong. It has a national genomics strategy about how to use it in health care. The largest programme in the world and one of the largest research studies in
The world called Our Future Health, which people may be aware of, should be aware of if you’re not is happening in the UK. So it’s going to recruit 5 million people to form a research platform, but also to give those individuals back information
About their personal risk of heart disease and diabetes and other conditions because of their genetics. So that’s a that’s a landmark global programme that’s happening in the UK, and we’re very delighted to be a key part of that. It’ll be out with schools that are going
Back to those 5 million people. So there are real positives about working in the UK. I don’t think many UK companies would think that their major revenue streams will be from the NHS. There are positive things, but it’s it’s notoriously difficult to work with.
But as a as an environment, an ecosystem, the UK has real advantages I think, as well as the UK. So we wrote obviously a lot about ARM and the sort of tragic loss of arm to the LSC and that that felt very existential at the time, I think.
And number ten spent quite a lot of time lobbying to get them to stay. But is there, is there anything that a the number ten or the government can do? Is there anything they should be doing or is it just sort of an ecosystem
Problem that’s too big for for one government to fix? I think looking at it company by company, I think it would arguably be better to look at the wider ecosystem at it kind of collectively. You know, growth does involve risk taking that does need to be a balance
With kind of corporate governance. But I think a key thing is around the government creating stability to create confidence kind of long term. And I think that’s critical. I think the UK is still a great place to start a company, right? A tech company.
And even when I started LV, we, I quit my job and started because I got to innovate. UK So that’s a government grant, £100,000. I think we have really good government innovation funding. Raising angel money, I think in this country is incredibly easy. I shouldn’t say incredibly easy.
There’s a lot of tax incentives, right? This is which really help de-risk the proposition for angels. And we have increasing that large number of institutional investors as well. Is there more that the government can do? Yes, of course, because I think as we’ve
Seen in the last couple of years, the startup ecosystem, we’ve lost somewhat a bit to France and Germany. And part of that is because of certain decisions, including, I would say, well, one of the key issues is talent, right?
And not only is it that Europeans are less likely to come and work in the UK, but also interesting to hear from piece of I think even from the universities at universities is such a key part of that tech ecosystem in terms of research and
So on. So on the talent side and also even removing, you know, some of the benefits around entrepreneur tax relief and so on. And Peter, do you agree with that, the prevalence, the availability of of angel funding and you’re in a capital
Intensive business, where in the lifecycle have you have you or do you do you fear that you’re going to encounter maybe some capital challenges because, you know, the environment here is is quite different than it is, say, in the US? So I mean, I agree with the general
Points. The IPO is the end of a very long journey. I mean, less long in some cases, but a long journey for a company. And there are many things that need to be in place even to get to that stage. And the UK has many positives, the kind
Of tax incentives for angel investors, the tax incentives for founders, the networked venture capital and support of venture capital world very strong universities with an increasing entrepreneurial spirit or acceptance that spin outs are important. Some university is. Oxford, in my case, is a really good example.
They have their own very large venture fund. In fact, for Oxford Sciences Enterprises, that’s not only the capital, but it’s a bunch of people who can give advice to the academics on the key stages in starting a company and in the early
Stages of building a company which is completely new for most of us in the academic world. So all those things in the UK are really positive. The UK actually has an industrial strategy for the life sciences, which is also positive in terms of capital.
Actually, we’re raising money at the moment just about to close around, thankfully. It’s clearly tough. I think it’s tough everywhere in the world. I don’t think it’s I don’t think it’s necessarily any tougher now in the UK than it is in the US now. And the investors we speak to are UK
Based and US based as well. We have two VC investors currently, both very supportive of their major US species. So, you know, I think it’s becoming much more international as a place in terms of access to capital as well as you know, as well as the availability of
Capital. Have any of you found Brexit to be a kind of unnecessary and frustrating impediment, or is it irrelevant for raising capital for or for running a startup? Yeah, I mean, so we have our main market is the US, but we have also launched in
Several European markets. So it’s just obviously more bureaucratic and getting yourself around additional regulation as I sort it inside. I think also on the talent side, there’s less even about right to work. And also I’m on the on the Board of Taxation.
So we do help in terms of entrepreneur visas and so on. But it’s it’s more a sentiment that I think when I this is my own experience, but talking to a lot of European startups and so on, they’d rather stay in mainland Europe. Now then comes the UK.
So that sort of fuelling this talent issue. Now Peter, I wanted to come back to something that you were talking about, which is the university ecosystem. I noticed that a lot of our startups on our list are spun out or the idea came from the lab and we have several
Professors on the list and you mentioned sort of the support that big universities like Oxford are offering. Is this is this a new trend? Has there been more emphasis in recent years? Are labs being encouraged or even pushed to come up with spin outs and interesting ideas like this?
Yeah, I think all those things are true. I think it’s it’s a very different world now from even ten years ago and incredibly different from 20 years ago, both in the sense that within the academic world, being interested in something entrepreneurial or interested in starting a company isn’t seen as a
Sort of poor second choice or, you know, you’re making money. So that’s not really what we do. It’s much more natural. It happens a lot more, which which also helps. That’s one part, I think. I think the readiness and the willingness and the awareness of academics about potential opportunities
Is much more now than it was. As we were saying, many universities have the right infrastructure in place to help academics think that process through. Sometimes academics think that that their great idea is going to solve some key problem and there are bits missing
So that reality check can be helpful. But where there are good ideas, the support that gets it from a good idea into a startup that’s well funded and so on is critical and that’s now much more available. Was there any particular catalyst for this in recent years, or was it just
Sort of a growing awareness of, you know, the potential of the labs and the brainpower in our universities here? I think there’s a bit of a culture change in the academic world, as I said, to make this kind of thing a more natural opportunity. There’s an awareness that this is
Happening in other parts of the world. And then in the UK, you know, some universities have been better at doing this and others and the others realise that, you know, the universities realise that there’s potential value there if they help to support spin outs in terms of their lab work and so on.
So I think there’s a lot of factors, all of which reinforce each other. And I should just adds Peter’s point I’ve seen so one of our investors is octopus, and they’re actually going out actually to university, Bristol and Manchester to start those sort of collaborations because obviously there’s
Much more capital in the UK is trying to go early. It’s trying to find different pools to tap into. But but obviously there’s so much in kind of IP at universities. Also, I think coming from that site, it’s really interesting.
When we started to put together this list earlier in the year, we were right in the midst of this grinding pullback in in fundraising and valuations. And Amy and I looked at each other and we’re like, is anybody going to be left
By the time we have this list? So we did lose a few. Yeah, maybe Sarah Starting with you. And we expect full transparency. We’re amongst friends here. Was there any point in 2023 where you or any of you were kind of worried about the environment and what the future look
Like? Yeah, I think you’d be lying to say no. You know, in 2020, when we were in Google Start ups, I had no idea that the world would be as it is kind of today. And, you know, when I set out on this, I
Did an ultramarathon in the Arctic and only seven of us finished. Hang on. An ultramarathon in the Arctic. Yeah. And seven of us finished. And I thought, you know, that be a really good kind of yardstick to measure. I like being a you know, it’s a metaphor
For company, but it has many, many effects. But, you know, you start out life makes that look like, you know, that run was a parkrun. Like, it is tough and it has been a tough year. Um, yes, I think, you know, it’s not been smooth sailing. And yeah, there have been moments where,
You know, the highs are very high, but the lows are very low. And with Elvie, you’re a little bit further along the journey. How how did you find sort of the last year? Hey, last year was pretty shocking, I think, for any high growth loss making
Consumer facing business, Suddenly overnight, the investor sentiment going from grow, grow, grow or at any cost to profitability was very difficult. We were already at a certain scale. We were beginning you know, we were well on the way to the path to profitability, but we did have to sort of change
Strategy quite quickly. But I think particularly what started MySpace and women’s health tech, you know, where Elvie has skill set points that we can sort of buffer those those those changes. But I think a lot of start ups, much earlier stage hadn’t quite proven out.
The product proposition and so on have unfortunately fallen by the wayside. So yeah, it was a hard year last year and I think from what I can see, even though the public markets have improved, I think private capital raises are not not in a particularly good place yet this year either.
Right. So it continues to be tough. Was it any different for you with sort of the city times? It has been tough. You know, the the whole sentiment of investors is completely different. And you could get a long way on hope and
Promise and good ideas and a and encouraging business model that had revenue in the future. But it’s all about what’s happening now. Now, that’s a big change. And if you’re at the wrong stage as a company, it’s particularly challenging and I’m kind of naturally very optimistic.
So maybe I haven’t worried about it as much as I could it. But it has been a really tough year. I mean, we’re ending up the year and it looks like we’re into the last minute of our panel as well. So I mean, Lightning Round, how are you looking out to 2024?
Are you more optimistic? Are you concerned or how are you feeling? Let’s start with Tanya. I am an entrepreneur as I was. I’m optimistic. You know, even though it’s tough, this the sudden shift around profitability, it was annoying. The investors were right in the sense of it’s such a great feeling of independence.
Right. Once you’re profitable as well. Right. We no longer reliance on having to raise external funds so that that feels good. It feels like a very solid base to be growing from. And I just have to keep hopeful, you know, that the that the signs, particularly our key markets are there,
That consumer confidence is coming back and that we’ll get over this this difficult period. I’m largely delighted in, you know, in construction and engineering profitability is king. So I’m actually in for, in a bizarre way, quite happy that, you know, you’re now talking to investors and they’re taking that quite seriously.
I think on a positive note, there is a lot of dry powder out there. There just needs to be more confidence to deploy it. And I think in the short term, we’re not going to possibly see a change. But I am optimistic for Q3, Q4 next year.
I’m also very positive. As I said, we spend a lot of the year fundraising is going around that will take us to the next stage as a company where they’re on a path to to that funding will get us to profitability and we’ve got fantastic opportunities. Right.
Well, thank you. Thank you so much for coming and joining us today. And I want to thank again all of the startups on our list and congratulations. Thanks very much.