Taking a look at the 4 Key Issues Facing the Technology Start-Up Market in 2015

1. The Four Key Problems Facing Tech Start-Ups in
2015
techstartups.careers /news.asp
19 Jan 2015
1. Continued Funding
When discussing the issues facing their sector in a May 2014 survey, start-up founders ranked “access
to finance” as their number one obstacle.
Whilst this may not initially be that shocking, with 33% of tech city businesses under the belief that the
growth in their business is hindered by a lack of access to capital, what is surprising is that the main
problem is actually garnering renewed investment.
“There’s a lot of angel investing, but once a company bursts through, there is no-one to catch the
company and propel them into a world class company.” CEO/Founder social ecommerce co.
Indeed, of the 43% of Tech City firms who sought to raise further capital, 23% reported having
significant problems raising the money. The problem seems quite prevalent, with 61% of 2014
investments going to early stage companies, leaving just 39% of capital for renewed investing.
In 2013, 136,939 new companies registered in London, meaning that competition for capital of any kind
is fierce. However, if we want to promote sustained industry growth and avoid a loss of talent, it is
imperative that the sector finds a way to support start-ups’ complex funding requirements.
2. Access to Talent
While the technology and digital industry grew by 16.6% between 2009 and 2012, the amount of digital
and tech companies in London grew by 76%.
Almost half of the 1350 businesses in Tech City (45%) report that the shortage of skilled workers is the
biggest challenge they face, with 77% adamant that they could grow faster if there was more skilled
labour available. Whilst nearly 600,000 people are employed in the technology or digital industry in
London, this is simply not enough to fill the skills gap within the start-up community.
It is reported that the majority of Tech City businesses have vacancies they can’t fill, with East and
Central London experiencing a real struggle to get the skills they need.
The result of this shortage is that 94% of business leaders are resorting to freelance workers to plug
the skills gap, and coming up short when it comes to using talent from abroad – with the license for a
start-up to sponsor a Tier 2 work visa very difficult to obtain.
3. and 4. Staff Retention and Affordable Resources
A staggering 42% of Tech City businesses find it difficult to retain their best talent, meaning that growth
is stunted due to the necessity for replacing talent as opposed to supporting business expansion
through new hires.
Similarly, young companies based in London are struggling to meet basic needs (office space, digital
infrastructure) due to the high property rents and low vacancy rates in the city. The lack of flexible lease
terms is also causing problems, limiting the flexibility to expand or exit where necessary.

2. Overall, the technology start-up sector faces several significant obstacles to continued growth
and development. Support from the government is necessary, in addition to an environment of
cultivation, built through corporate investors.
http://www.kpmgtechgrowth.co.uk/obstacles-facing-london-start-up-companies-by-corinne-thompson/
http://www.gfk.com/uk/news-and-events/press-room/press-releases/pages/tech-city-growth-stunted-
by-talent-shortage-and-lack-of-access-to-capital.aspx