‘Aspiring Unicorns’ Supporting High Growth Tech Firms

Aspiring Unicorns, designed and delivered by leading law firm Addleshaw Goddard, provides high-growth tech businesses with access to crucial insights for supporting their business growth strategy.

The Aspiring Unicorns series comprises seven critical lessons for high-growth technology firms, sharing insight on key topics such as data and disputes to IP and investments. Delivered over the next coming months, the first instalment covers dispute revolution, providing businesses with useful steps on how to best avoid a dispute.

The Aspiring Unicorns series follows the recent announcement of the fifth cohort of UK tech companies to join the firm’s AG Elevate programme, a fast-track legal mentoring scheme for growing technology businesses. Across the UK, eleven companies were selected and will receive support and mentoring from specialist lawyers at Addleshaw Goddard.

David Anderson, a Corporate and Commercial Partner at Addleshaw Goddard who specialises in tech, said: “Following the success of our AG Elevate programme, and the continued growth across the UK tech industry, it felt like the perfect opportunity to launch the Aspiring Unicorns initiative.

“This series of content, revealed in instalments over the next few months, will provide accessible and crucial insight to high-growth tech businesses looking to scale up and strengthen their position within the market.

 Elvan Hussein, a Corporate Partner at Addleshaw Goddard, said “We’re encouraging high-growth tech firms and investors with a strong tech portfolio, to take full advantage of this fantastic resource.”

As part of the initiative, Addleshaw Goddard will host a number of related webinar sessions where chapters from the series will be discussed.

For more information about the Aspiring Unicorns programme, visit:  https://www.addleshawgoddard.com/en/insights/insights-briefings/2021/general/guide-aspiring-unicorns-supporting-high-growth-tech/

Not boring! Creative! And inclusive!

What does the future of fintech look like’ is a question we’ve been asking across the FinTech Scotland cluster all week. One very wise comment asked us to consider the question differently What should the future of fintech look like’?

From all the discussion so far, there are two comments that have struck a chord with me. It will not be boring’ and We need to teach the future’.

The range of possibilities is limitless and there’s no doubt the consensus so far is that it can help us advance the digital economy in a number of ways, all the while enabling financial inclusion and helping us drive towards our net zero goals.

It will not be boring! 

Enabling this future is a skilled workforce drawn from a broad talent pool and range of experiences. We have work to do to support the development of those skills but continuing to develop fintech for the future will need a team of creative artists and designers working with software developers, regulatory and legal expertise, who have access to cybersecurity expertise, data specialists, linguists, psychologists and more.

It provides a true opportunity for collaboration, partnership and change, and it creates an environment for innovation and creativity that builds trust through customer centred design with robust privacy and security.

The innovation will take us in different directions. We see new examples of that everyday especially when it comes to things like digital and crypto currencies, or the future of payments two key topics in the recent FinTech Scotland podcasts. 

We need to teach the future! 

As we think about the role of digital technology and FinTech for the future a broadly unanimous view is that our children are one step ahead and are already embracing it. Fictional digital currencies like Minecoins, Simoleons, Life Points, and others are well understood by the next generation.

As FinTech for the future develops, many of those contributing views want to see how it can deepen future generations understanding of financial services to build future personal financial resilience. Many more are hoping that we embrace the opportunity to encourage more girls, women, Black, Asian, Ethnic and other minorities into the industry.

The opportunity to excite and intrigue more of the next generation about fintech and technology is already here and the stories we tell now will help us build and teach our future.

Zumo, Leutheria, Nude, Sonik Pocket, Sustainably, Qpal, Guiide, Airfunders and Visible Capital are just a few of the Fintechs in the FinTech Scotland community that are shaping future stories to inspire us all.

If you have a view on What the future of FinTech should like like’ please get in touch. I’d love to hear it.

A new era of Competitive R&D tax credits?

The Government has long recognised that a competitive R&D tax credit scheme’ is an important driver of its objective for the UK to become a global leader in science and innovation. We know that many Fintech Businesses rely on R&D credits as a valuable funding mechanism for innovation so it is imperative that Fintech Businesses take note and engage with the recently launched government consultation which could bring the biggest reform of R&D credits since the SME scheme was introduced over 2 decades ago.  This is especially important in Scotland where the number of Fintech companies has grown from 26 (2018) to upwards of 155 in 2021. 

This is a once in a lifetime opportunity to bring the R&D regime up to date and ensure it is well targeted and globally competitive.  With over £200m in R&D tax credits claimed by businesses in Scotland, it is important that businesses engage with the consultation and share their insight on how the R&D regimes can be improved to help them invest in innovation.

The consultation is wide-ranging and it is clear that whilst there is no doubt that the government is fully committed to increasing UK R&D spending, in a backdrop of record government borrowing, the R&D regimes must provide value for money and be highly effective at encouraging investment in innovation. The focus of the consultation can be segmented into the following key areas where we’ve shared our initial thoughts on the relevance to Fintech businesses:

• Structure of the R&D regime – particularly whether the SME and large company R&D Expenditure Credit (RDEC) schemes be combined? 

Currently, there are two R&D regimes – the SME regime which offers high cash incentives (up to 33% of spend) and the RDEC regime (10% cash benefit) for those businesses which do not qualify for SME credits. The consultation suggests abolishing the SME scheme and a move to “RDEC for all with the key benefit of the RDEC regime over the SME credit being the ability to account for the credit above the line’ (i.e. improve profits). However, it is likely different rates would still be needed for different-sized businesses. 

Given the government’s commitment to encouraging investment in key high-tech industries, could this consultation also provide an opportunity to implement varying credit rates depending on the sector and activity being undertaken? Clearly, high-tech industries such as Fintech play a fundamental role in Scotland and could benefit from a regime that offers greater incentives for high tech innovation.

• Ensuring the UK R&D credit system is internationally competitive

The government has repeatedly stated its commitment to ensuring the UK is seen as a global leader in Research and Development, with the aim of increasing R&D expenditure to 2.4% of GDP by 2027. The latest consultation clearly demonstrates that the government sees the UK tax credit regime as part of its strategy to help encourage investment in UK innovation and as part of that, understands the importance of the UK R&D tax credit regime being globally competitive when businesses look to locate R&D functions. Scotland is becoming increasingly known for being one of the UK leading Fintech hubs and is routinely considered as a key location for R&D centres. For Scotland to continue to benefit from the positive cascade effect offered by such inbound investment, in an increasingly competitive world, it is important that the UK’s R&D regimes remain globally competitive.

• Review of R&D definition and Scope of eligible costs

The definition of R&D and eligible costs are the cornerstones of the R&D regime and compelling responses on these key areas have the potential to lead to fundamental changes in the R&D regime. This includes potential inclusion of Cloud Computing costs such as SaaS, IaaS, and PaaS as eligible expenditure, in addition to on-prem license costs used for R&D. Currently, the UK R&D regime is one of the most generous regimes in terms of allowing overseas expenditure to qualify under the externally provided worker rules. There has long been a debate about whether the inclusion of such costs really contributes to encouraging investment in UK R&D. However, the eligibility of such costs does mean the UK and Scotland is attractive for global businesses looking for an R&D Hub with its unique ecosystem of academia, technology, science and innovation infrastructure.

• The operational effectiveness of the regimes

Improving the administration of R&D credits including whether it should be part of the tax return filing and the role of agents in assisting R&D claimants is a key part of the consultation. With the significant increase in R&D claims over the last 5 years, it’s not surprising that the administration and review of claims have become a challenge for HMRC. And there are growing concerns within the Government that R&D tax reliefs are open to error and potential abuse. Whilst the more straightforward nature of the documentation requirements and lack of preapproval requirements’ makes the UK regime more vulnerable to abuse, there is a recognition that this approach makes it more attractive when compared to other global R&D regimes with extensive preapproval requirements. So any changes to the administration of the regime needs to be carefully balanced to ensure effective compliance alongside minimising the burden and uncertainty for claimants.

Likelihood of substantial changes to the regime?

The R&D regime is seen as one of the central pillars to the government’s commitment to encourage an increase in R&D spending. Therefore, whilst its existence is likely to remain, this consultation indicates significant changes are on the horizon. It is important that those claimants who rely on the valuable funding provided by the regimes engage with the consultation process. 

Survey

We want to make the most of this opportunity to help to shape the design to be internationally competitive and well targeted for the long term.

We are collating your views on the current R&D regime and potential changes to make it more effective as an incentive for businesses to invest in R&D in the UK.

To share your thoughts via our survey, please email me at neil.muir@pwc.com.