Martin Mignot of Index Ventures talks stock options, Deliveroo’s IPO and London Tech Week
One of Britainis in the lead technology investors have warned that London risk of falling behind rival technological poles in Europe unless the Government proposes to revise the rules on stock options and visas to keep the UK competitive.
Martin Mignot, a partner of venture capital firm Index Ventures, told The Standard: “Obviously, over the past decade, London has been the perfect place to start a business. Business. The gap between London and the rest of Europe was huge. Fast forward to today, the gap has narrowed.
Brexit has made the UK a less attractive place for founders and visa rules make it difficult to Talent to come here even if they want to, said Mignot. The big flop of DeliverooThe London Stock Exchange listing has also damaged the City’s reputation for technology.
“It’s not the best look,” he said. “People have even gone so far as to say that we don’t need high growth tech companies in the UK, which I think is a crazy thing to say.”
Mignot said London needs better analysts to cover the tech sector and help public market investors understand companies like Deliveroo.
“Just looking at the income statement of some of these fast growing companies is a fundamental mistake,” he said.
The “biggest” problem for tech companies is with tax laws on stock options, Mignot said.
The UK’s Enterprise Management Incentives (EMI) program gives startups a tax-effective means of granting stock options to staff. These options are a crucial tool used by startups to convince top talent to join start-ups. The current rules cap the amount that can be allocated to individual staff at £ 250,000 and can only be used by companies with assets of less than £ 30million.
The tech industry wants the government to review the 20-year-old rules, arguing that they are now out of step with the reality of modern, fast-growing companies. The industry now produces “unicorn” companies on a regular basis – private companies worth over $ 1 billion. Mignot said reforms in other markets in Europe had left the UK “in the middle of the pack” when it came to stock options.
The Treasury announced a consultation on EMI reforms in the March budget and Chancellor Rishi Sunak pledged “ambitious visa reforms” to attract top talent after Brexit. Mignot said he was “very optimistic” but stressed that it was necessary to act.
“It’s what people say and what people do – praise companies and funding programs, yes that’s good but we need visa reform,” he said. “It’s all about talent, right? “
Mignot is one of Britain’s most successful and important technology investors. In addition to Deliveroo, he has supported startups like a $ 33 billion (£ 23.9 billion) digital bank Revolution and Trainline.
His comments on London’s competitiveness preceded London Tech Week, which begins next Monday.
Despite concerns about London’s lagging behind in competitive stakes, Mignot said the city’s tech scene is still vibrant.
“We are very excited about this week and about London in general,” he said.
Index Ventures has invested £ 1 billion in London startups since its inception in 1996, supporting Farfetch, Just Eat and Wise. This year, he racked up earnings from fleets from companies such as Deliveroo, Trustpilot and Wise. Index announced a new $ 3.1 billion fund to support new businesses in July.
“Overall it’s a great time,” Mignot said.