With London Technology Week a few months back and the tech community out in full force, I’ve been thinking back to when I was first building my own business eight years ago. Many of the people I socialised with on the London startup scene at that time are now back doing regular jobs. Their businesses didn’t turn out as planned and so they headed back to the comparative security of working for somebody else.
Now DataSift has offices in New York and San Francisco, I get to socialise with US entrepreneurs and the contrast with the UK is stark. In the US, I regularly meet serial entrepreneurs on their second or third startup, and if failing with your first startup is not quite a badge of honour, it is certainly seen as hugely valuable experience and nothing to be ashamed of.
When it comes to entrepreneurship in the UK, there’s still a huge stigma to failure. Research with would-be entrepreneurs last year revealed that nearly one in ten say they fear the words, ‘I told you so’ as a reason for not making their ideas materialise – there is simply no room for that kind of fear if you want to have a successful business. People are overly worried about what other people think, which just isn’t the case in the US. So what can be done to address this fear of failure among UK entrepreneurs?
Shed that British reserve
National stereotypes can be easily dismissed as outdated and irrelevant, especially as the world is more international now than it has ever been. But in business I do feel that there’s an inherent cautiousness in many UK entrepreneurs, especially in comparison with their US counterparts. This is partly to do with the respective cultures in the two countries – Americans are by and large more gung-ho, while this side of the Atlantic we still exhibit signs of that classic British reserve.
This manifests itself in two main ways. Firstly, there’s a lack of willingness to go all out, 120mph on your first startup. Without that, success really is in the lap of the gods And secondly, if and when that startup does fail, it’s seen as a sign that the individual isn’t cut out for life as an entrepreneur, instead of them learning from the experience and trying again. I believe that entrepreneurs in the UK can definitely look to the US for a confidence and bullishness that they are on the right path with their startup. And even if they aren’t on the right path this time, getting lost will only help them on the way with their next venture.
A framework of support
But there is a reason for that confidence; it isn’t just an in-built characteristic for US entrepreneurs. In the US, there is an incredible support framework in place, a framework that enables entrepreneurs to pick themselves up and dust themselves off when their first, second, third etc. businesses do not go as planned.
The Valley’s support system is vast and it’s an environment where second and third-time entrepreneurs mentor and invest in the next wave of start-ups and /or set up more businesses themselves. The organic growth of this entrepreneur ecosystem needs to be replicated in the UK, and the government can play a major role in this by putting more incentives in place for entrepreneurs.
One that works well currently is Entrepreneurs Tax Relief. By only paying tax at 10% on qualifying assets, entrepreneurs have the ability to plough more money back into their next business. This takes away a little of the fear of failure and helps foster a culture that encourages serial entrepreneurship. This government has consistently talked of wanting to make the UK more like the US in terms of the support it gives to startups, and it has introduced some measures to reflect that. But more is needed.
Fear of failure is undoubtedly inhibiting the success of startups in the UK. Measures are in place to address this but it does ultimately come down to the individual and their ability to bounce back. So your first venture failed – stop feeling sorry for yourself and come back with a better idea second time around!