Tech evangelist: Stephen Kelly, Tech Nation chairperson

Tech Nation chairperson Stephen Kelly sees the maturity of Singapore and South-east Asian markets as a big draw for UK tech founders amid what he says could be a golden era for technology in both regions.

Claudia Chong

Published Fri, Oct 1, 2021 · 09:50 PM

WHEN it comes to truly global, high-growth companies, the United States has its FANGAM (Facebook, Amazon, Netflix, Google owner Alphabet, Apple and Microsoft) lineup, and China has BAT (Baidu, Alibaba and Tencent). So what does the United Kingdom have to offer?

"Yeah, I think that story is yet to be written," Stephen Kelly, chairperson of UK scale-up platform Tech Nation, tells The Business Times.

For years, the UK's tech hub has struggled to step out of Silicon Valley's shadow. Founders and investors watched as companies such as Tesla and Stripe rode a meteoric rise to hit billions of dollars in valuation. The combined market capitalisation of the FANGAM stocks is now 3.5 times the UK's 2020 gross domestic product.

But over the past decade, the fortunes of UK's entrepreneurs started to change. In 2013, unicorns - privately-held startup companies valued at more than US$1 billion - were unheard of. Today, the UK has minted 40 tech unicorns, PitchBook data showed.

"I think we've got some brilliant companies, such as Revolut, Babylon, Monzo and Darktrace. But what my time at Oracle taught me was ultimately you've got to be the global market leader. And now we see these companies coming into the UK who have genuinely the potential to be global market leaders," says Mr Kelly, who spent almost a decade at the start of his career with the American computer software company.

"Companies like the Googles and the Facebooks have the valuations because they established global market leadership in a multi-billion-dollar marketplace. So I think a lot of the reason why I'm very excited about the UK and our relationship with South-east Asia is because it's all about writing the next chapters of the book. And that book is all about growth, and ultimately these companies becoming global market leaders."

In March, Tech Nation ventured into international territory for the first time after opening its first overseas office in Singapore. The office serves as its regional headquarters for Asia-Pacific, with former tech executive Max Pourrat hired as head for the region.

Tech Nation was launched in 2011 by then UK Prime Minister David Cameron to support a tech cluster in East London. Over the years, it expanded its network of growth programmes, events and data resources to all corners of the UK to help startups grow domestically.

More than 30 cohorts and 800 companies have graduated from Tech Nation's growth programmes since the organisation's inception, says Mr Kelly. Alumni include fintech unicorns Wise, Revolut and Checkout.com, and cybersecurity company Darktrace, which listed on the London Stock Exchange (LSE) in April.

One of the UK government's efforts at turning the UK into a global tech powerhouse involved launching an £8 million (S$15.1 million) Digital Trade Network initiative in the Asia-Pacific. Tech Nation tapped the scheme to launch a programme that currently supports more than 40 UK startups with their market entry into Singapore. It does so by helping the startups connect with partners and understand the business landscape.

Besides Singapore, the organisation has chosen to focus on Japan, South Korea and Australia for its international growth programme. A second cohort for the Singapore programme will be launched in the coming months, involving more than 20 UK startups.

"This could be a golden era for technology both in South-east Asia and in the UK," says Mr Kelly.

Bridge between worlds

Tech collaboration between the UK and Singapore has been ongoing. In June, the Singapore government said it has started negotiations on a bilateral digital economy agreement. The UK-Singapore Digital Economy Agreement, aimed at increasing the ease of doing business digitally, will be the first such pact between an Asian and a European country.

Talent incubator Entrepreneur First picked Singapore as its first location to expand to outside London in 2016. The organisation, which struck a partnership with a government agency, matches deep tech experts with each other to build a startup from scratch.

Then there are companies such as Wise, Revolut and Babylon Health, which opened offices or worked with large partners to expand in Asia.

"We're seeing an incredible richness of UK tech companies now looking at international expansion and looking at South-east Asia as a very attractive marketplace, particularly with the growth you're seeing there. The digital economy is worth about US$100 billion at the moment, and is projected to grow to over US$300 billion in 2025. And the penetration and innovation of mobile wallets and Internet users just continues to grow," says Mr Kelly.

Beyond market size, he sees the maturity of the Singapore and South-east Asian markets as a big draw for UK tech founders. There is also the appeal of a sophisticated capital market and a hotbed for innovation.

Part of Mr Kelly's observations stemmed from his time as chief operating officer for the UK government from 2010 to 2014. "We always had huge respect for the Singaporean government and what Singapore had done in terms of systems and technology for citizens. There's brilliant innovation from the public sector and the private sector. There's almost this flywheel of innovation," he says.

Tech Nation's research found that for UK tech companies, Singapore and Brazil were the fastest rising global opportunities for trade in digital business. The two countries climbed five and 17 places respectively in the rankings for global tech opportunity between 2019 and 2020.

The rankings were determined by factors that contribute to the attractiveness of a location for doing business, with an emphasis on digital tech products and services.

Technology is contributing more to the UK's economy each year. Tech Nation's 2021 report found that UK tech gross value-added increased from £104 billion to £149 billion from 2010 to 2018, and has grown by an average of 7 per cent each year for the last three years.

A separate Job and Skills report in 2020 found that UK tech employed almost three million people - that's almost 10 per cent of

32.2 million employed people, going by statistics from the Office for National Statistics.

Venture capital investment in UK tech is heating up as well. Last year, it hit a record high of US$15 billion, ranking third in the world after the US (US$144.3 billion) and China (US$44.5 billion). And it seems the UK is more attractive to international investors than ever - 63 per cent of investment in UK tech came from overseas in 2020, up from 50 per cent in 2016.

Witnessing the rise of tech

In many ways, Mr Kelly could have foreseen the huge impact technology would have on the UK's economy.

In 1988, he joined Oracle as part of its European management team. "It was just a scale-up when I joined. But there was this mantra of triple-digit growth and expansion. I worked with some amazing people such as Marc Benioff, who later founded Salesforce, and Steve Garnett, who was instrumental at Siebel Systems," he recalls.

His team built playbooks for how to grow companies, have a business strategy and go international. He spent time in South-east Asia getting to know the market, form partnerships, and understand customers.

"I saw firsthand the stuff they don't teach you on an MBA at Harvard, how to build and scale and grow a sustainable company, and the phases of growth. At the time you used to say that you either grow fast or you die slowly. And it's a kind of innovation where if you look at the Fortune 500 companies 30 years ago compared to now, you'll probably find (only some) still exist."

After nine years at Oracle, Mr Kelly left to become chief operating officer and later chief executive officer at American software startup Chordiant. He helped steer the company towards an initial public offering (IPO) on Nasdaq.

His next role was as chief executive officer (CEO) of Micro Focus, a public software and information technology (IT) company that was struggling with slowing sales. He led the improvement of earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins from 20 to 40 per cent and oversaw a number of key acquisitions, including the buyout of

Nasdaq-listed NetManage at a US$73.3 million valuation.

His last private sector role before joining Tech Nation was as CEO of multinational enterprise software company Sage Group. Amid its work with local charities and efforts to combat youth homelessness, he gained a better understanding of the importance of environmental, social and governance (ESG) values.

"I think companies have got to do a far greater role. And I sort of learned this when I was in government, because in the developed economies, all of the countries have massive public sector debt. So, we are going to see companies - because they're the growth engines of the economy - not only create jobs but also give back to communities and bring communities together to solve some of these issues around equality."

Growing pains

Criticism of the UK's tech ecosystem remains despite the improvement over the past decades. Some founders have aired concerns over the sophistication of local investors, while others have noted that more can be done to celebrate the successes of British entrepreneurs.

A particularly thorny topic in the industry is that of tech listings. Startups have long viewed foreign bourses such as the Nasdaq as being more attractive for their valuations and investors' understanding of high-growth companies. It has been a source of anxiety for Britain's financial watchdog, which this year stepped up efforts to overhaul its listing regime in areas such as dual-class share structures and blank-cheque company IPOs.

These changes seem to be welcome by the ecosystem's players, though it remains to be seen if the LSE can become vibrant enough to rival that of Wall Street. Healthcare company Babylon Health, for instance, has opted to merge with a US blank-cheque company in a deal worth US$4.2 billion.

That said, several companies including Deliveroo, Wise and Darktrace have already listed on LSE this year and have helped push IPOs to a record high. Shares of biotech company Oxford Nanopore surged 44 per cent on the first day of trading on Thursday, valuing the company at almost £5 billion.

"We're not going to rest on our laurels and there's loads more to do, but it's nice to pause for a moment and celebrate the great successes that the UK has done in terms of technology," says Mr Kelly. "But we're very cognisant. We keep our feet on the ground and always recognise there's a lot more to do."

STEPHEN KELLY

Chairperson Tech Nation

1961: Born in England

EDUCATION

1980-1984: University of Bath - BSc (Hons) in Business Administration

2016: Honorary Doctorate

CAREER

1988-1990: Oracle Corp - General Manager UK Government

1990-1992: Oracle Corp - Director UK Software Alliances

1992-1994: Oracle Corp - Director European Software Alliances

1994-1997: Oracle Corp - Director Vertical Market Solutions (Financial Services, Consumer Packaged Goods, Telcos)

1997-2001: Chordiant - COO