When a government announces tax hikes and entrepreneurs celebrate, you know something’s deeply wrong. Yet that’s exactly what happened in Britain this week, as tech founders cheered Labour’s “modest” increase in capital gains tax—simply because they’d feared worse. It’s like watching passengers applaud because their delayed flight finally took off: The relief is real, but it misses the bigger problem.
I’ve watched this drama unfold from a unique vantage point. My company, Cleo, was born in London in 2016 but now operates entirely in the United States. Moving to America went beyond market size—it was a stark recognition that Britain stifles ambitious tech companies.
The surface-level explanations are familiar. Brexit yanked Britain from the world’s largest trading bloc. A decade of austerity squeezed public investment. Political chaos — five prime ministers in five years — spooked investors. But these are symptoms of a deeper disease: Britain has built an economy that rewards playing it safe over taking bold risks.
Look at the London Stock Exchange’s biggest companies. They’re dominated by oil giants such as BP, mining companies such as Rio Tinto, cigarette makers such as British American Tobacco, and traditional banks such as HSBC. These aren’t just mature businesses—they’re sunset industries. They don’t create new jobs, they don’t drive innovation, and they certainly don’t position Britain for the future.
The scale of our missed opportunity becomes clear when you look at the numbers: American venture capital firms manage $270 billion in assets, while European VCs collectively manage just $44 billion. This represents more than a funding gap—it’s a chasm that separates ambition from achievement. It’s the difference between building the next generation of world-changing companies and watching from the sidelines.
Contrast this with America’s transformation. Over the past two decades, the U.S. Created conditions where tech companies could prioritize growth over immediate profit. Stock markets embraced companies that poured money into expansion rather than dividends. Their regulators balanced oversight with innovation. The result? Seven of the world’s 10 most valuable companies are now American tech firms.
Britain has the basic ingredients for a similar transformation. Our universities rank among the world’s best. London’s financial sector rivals New York’s. Our talent pool runs deep. Even our cost structure should be an advantage: European tech companies can hire senior software engineers for half what they cost in Silicon Valley, and our employees stay in their jobs nearly twice as long. This combination of talent stability and cost efficiency should be rocket fuel for growth.
Yet despite these advantages, we’ve failed to build the ecosystem that turns promising startups into global giants. When our companies do succeed, they often outperform their American counterparts—which makes our systemic failures all the more frustrating. These failures are painfully concrete. British public markets demand profitability too soon, pushing growing companies to sell out early. Our venture capital scene has plenty of money for startups—but it dries up when companies need hundreds of millions to compete globally. Our regulators often seem more focused on restricting innovation than enabling it.
Even our tax incentives, while well-meaning, reflect this small-thinking mindset. Programs such as the Enterprise Management Incentive scheme help startups give stock options to early employees, and research & development tax credits support initial innovation. But these tools were designed for modest growth, not for building the next Google or Amazon.
This isn’t a partisan issue. Many of Britain’s most important tech-friendly policies were introduced by previous Labour governments. But they were created for a different era, when “tech” meant adding a website to your traditional business, not rebuilding entire industries from the ground up.
Britain needs more than tweaked tax rates. We need a complete rethink of how we support technological innovation. We need stock markets that reward long-term investment. We need regulators who see their role as enabling progress, not just preventing harm. We need growth capital that keeps companies in Britain as they scale.
Most crucially, we need to rebuild our appetite for risk and ambition. The current system pushes British founders toward cautious growth, early exits, or moving abroad. Beyond individual companies, this shapes the very economy we’ll leave to our children.
Labour’s restraint on capital gains, amid broader tax increases, shows they’re listening to Britain’s entrepreneurs. But listening isn’t enough. Britain needs to make a fundamental choice: continue our cautious path and watch the future happen elsewhere or unleash the full potential of our entrepreneurs. We have the talent. We have the ideas. What we need now is the courage to think bigger.
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