London's start-up crown is slipping as founders eye the exit

Britain likes to describe itself as one of the world's best places to start a business, but many entrepreneurs are no longer convinced. New research from The Entrepreneurs Network (TEN) suggests that founders still believe the United Kingdom has enormous strengths, from world-leading investment schemes to the global reach of English law. Yet high taxes, soaring costs and a failure to sell Britain's success story to the world are prompting many to look elsewhere. Even London, long regarded as Europe's start-up capital, is beginning to lose some of its appeal.

World Class or Over Hyped?

The latest research from The Entrepreneurs Network (TEN) makes interesting reading.

Britain likes to call itself a world‑class home for entrepreneurs, but founders aren’t always quite so convinced by the hype. New research from The Entrepreneurs Network (TEN) shows the UK isn’t presenting itself, or performing, like a global startup powerhouse. London, once the undisputed magnet for talent and capital, is now a city founders are considering leaving.

Founders see the UK:

• 70% of founders say the UK does not present itself effectively to the world as a place to start and grow a business; only 26% say it does.

• 57% think Britain is a good place to start a business but only 13% think it does a good job of showing that globally.

• Tax is the single biggest factor shaping how founders judge a country (51%), ahead of the strength of its investor networks (41%) and cultural factors such as language and lifestyle (33%).

• Asked what would most convince a founder to build in the UK specifically, founders point to SEIS/EIS tax reliefs (49%), the UK's position as Europe's largest venture capital market (42%), the global reach of English law (34%), and the ease of starting a business (33%).

When it comes to how they view London:

• 82% of London-based founders say the city's quality of life matters to their decision to build there (48% say it is very important).

• The biggest draws are London’s ecosystem and network effects (48%) and serendipity, simply already being there (44%); access to capital and finance is cited by just 21%.

• Cost dominates the downsides: 83% cite the personal and staff cost of living and 73% cite high operating overheads, far ahead of investor risk aversion (34%) and regulation (20%).

• 55% of London founders have considered moving their company out of the capital in the past year, and 27% have seriously considered it or actively planned to; only 28% of founders outside London have considered moving in.

• Founders see San Francisco and New York not Berlin, Amsterdam or Paris, as London's closest rivals.

• A London base is seen as making fundraising easier (63%, against just 8% who say it makes it harder) and boosting credibility with investors, press and partners (61%); hiring is the exception, with 14% saying a London base makes it harder.

• Just 37% would actively encourage another founder to base themselves in London, while 36% are unsure and 22% would not.

A Brand Problem

There’s a brand problem and while founders are not questioning the UK’s potential, they’re questioning its story. We have the ingredients but we’re not getting the message across the globe successfully.

It’s hardly surprising that tax Is the deciding factor for many.  It’s the lever that moves founder behaviour. The rest is secondary. There’s a narrative that says entrepreneurs should pay more tax but they take huge risks to start and grow, create jobs and innovate, while paying large amounts of tax already there’s a danger of taxing them out of the UK.

The UK’s strongest selling points are structural not political. Founders want certainty, incentives and global credibility.

London is still a draw

London is still attractive as a place to do business, just. The shine has come off the capital somewhat. The quality of life is great and there’s the ecosystem, the density, the energy, but founders are increasingly asking whether it’s worth the cost. The cost of living and higher operating costs take some of the gloss off and some are thinking about leaving.

London is still a global hub but it’s no longer the default choice and San Francisco and New York are snapping at its heels.

London Is good for fundraising though as in being London based still has kudos but only 37% of founders would actively encourage another founder to base themselves in London.

The UK is not failing founders because it lacks talent, capital or infrastructure. It is failing because it doesn’t tell its story well, compete on tax, or support founders with cost‑of‑living and cost‑of‑doing‑business pressures. London is becoming too expensive to justify and worryingly a significant proportion are quietly planning to up sticks.

UK Strengths

Britain’s strengths are SEIS/EIS, English law, VC depth, ease of starting a business, and these are powerful, but they are being overshadowed by cost, complexity and weak global messaging.

The UK doesn’t need a reinvention. It needs founder‑first narrative, competitive tax stance, a London cost reset, and a national brand that reflects reality. Founders feel the UK could be the best place in the world to build but it isn’t acting like it. If the new government wants growth it needs to encourage many more entrepreneurs to start and build here and the challenges have been clearly spelled out by TEN’s research.