Founders and VCs weigh in on the U.K.’s ambition deficit

Young Brits are catching flak for their apparent lack of entrepreneurial drive, sparking a broader debate on whether the U.K. startup scene is facing an ambition deficit.

It started when U.K. Business Secretary Peter Kyle criticized British university students for lacking the same interest in starting a business as their American peers.

“In Britain, if you went to a group of undergraduates, how big would that group have to be before you found someone that said their choice of going to university…was because they wanted to become a founder?” Kyle said at an event hosted by AI chipmaker Nvidia in London.

“The entrepreneurialism simply isn’t there – the drive, the vigour.”

He’s not alone; the tech and startup scene in the U.K. is often viewed as lacking the same intensity and speed as its counterparts in the U.S. and China.

It’s led some venture capitalists to suggest that European founders need to work harder and adopt the rigorous “996” work schedule — 9 a.m. to 9 p.m. six days a week — infamous at China’s tech companies.

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The stereotypes are not necessarily backed up by the data, however. Almost 60% of young British people were interested in starting their own business, according to a recent study conducted by the Federation of Small Businesses (FSB) and Simply Business of 2,079 people between the ages of 18 and 34 in the U.K.

However, only 16% of them actually took the leap into entrepreneurship, with most citing a lack of formal business education as holding them back.

“There’s definitely a large appetite to explore entrepreneurship from a very young age,” Dama Sathianathan, senior partner at Bethnal Green Ventures, told CNBC Make It.

“It’s just getting really hard to show ambition when the system is rigged against you … You don’t have the right supportive infrastructure to be able to tap into money, to really have the drive to aim high.”

Bristol-based entrepreneur Tom Wallace-Smith made Forbes 30 under 30 in Europe last year — but he said entrepreneurship feels out of reach to most people in the U.K.

“From people’s public perceptions, the whole track of Elon Musk or Jeff Bezos or Mark Zuckerberg feels quite mythological to people, it’s totally out of someone’s reach,” Wallace said in an interview with CNBC Make It.

Wallace, who co-founded nuclear fusion startup Astral Systems in 2021 while finishing a PhD in nuclear physics at the University of Bristol, said he initially didn’t know that entrepreneurship was a viable career path, and expected to end up in a big company or become an academic.

He argued that the U.K. has no shortage of successful entrepreneurs, but the government and media “could do a better job of telling founders’ stories” and increasing exposure to startup environments.

A lot of people in the U.K. see entrepreneurship represented via comedic reality TV shows like The Apprentice or Dragons’ Den, Wallace-Smith said, and are lacking role models. “It’s more about making fun of them rather than championing them.”  

The FSB and Simply Business survey found that 15% of young current or aspiring entrepreneurs said that seeing others succeed would boost their confidence, but over a third hadn’t recieved any guidance or support from local entrepreneurs or businesses.

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Harry Stebbings, venture capitalist and founder of the 20VC podcast, puts some of the blame at the door of “risk-off” British parents, with the instability surrounding entrepreneurship making it an unattractive career path.

Instead, Stebbings — who’s a champion of the 996 work week — said young people seem to aspire to work at corporate firms like Goldman Sachs, and McKinsey.

Astral System’s Wallace-Smith said many U.K. entrepreneurs aren’t seeing enough “direct incentive” to scale and grow in the U.K. as opposed to the U.S. — indicating that it’s largely a structural issue that’s fueling the entrepreneurship deficit.

“The ones that are left in the U.K. are here with gritted teeth, like by hook or by crook, to make sure that we have success in the U.K. because I just care about the country and I want to see this succeed here… It’s more of an outlier than the standard,” he said.

Atomico’s State of European Tech 2024 identified a talent leakage to the U.S., with at least 800 companies that could have been founded in Europe instead being established across the Atlantic.

It also found that established startups trying to scale up past the seed funding stage tend to struggle to secure investment. In fact, twice as many U.S. companies — 8.3% — raise rounds of $15 million or more, compared with Europe’s 4.1%.

Additionally, half of European companies have tuned to the U.S. to secure a lead investor since 2015, according to the report.

Although risk appetite continues to exist among British entrepreneurs, it doesn’t for investors, Sathianathan said, noting that VCs in the U.K. don’t want to risk their money.

Damian Routley, a chief operating officer at venture studio and startup accelerator Founders Factory, said the financial incentives for founding a company as a young person are “increasingly weak.” with tax reliefs for both entrepreneurs and investors diminishing since the Covid-19 pandemic in 2020.

The lifetime allowance for Business Asset Disposal Relief (BADR) has been slashed from £10 million ($13.45 million) to £1 million, while Capital Gains Tax (CGT) rates have risen, leaving founders with smaller payouts when they sell their companies.

“This all means it’s harder to take the plunge and launch a business than to go for the safety of a PAYE [Pay As You Earn] grad job,” he told CNBC Make It.

Meanwhile, some early-stage funding incentives are considered generous, but are focused on investors, leaving many startups struggling to secure the capital they need to grow.

“It’s a structural issue, which then seeps into it becoming a cultural issue, because if you’re faced with continuously having to struggle, why would you choose to struggle on this entrepreneur path?” Sathianathan added.

It’s not all doom and gloom, though, as the U.K. remains “Europe’s premier startup hub,” Routley said.

In 2024, £9 billion was invested into venture-backed businesses in the U.K., maintaining the country’s position as the third-largest VC market behind the U.S. and China, according to the British Private Equity & Venture Capital Association’s Venture Capital in the UK 2025 report.

Various incubators and accelerators have also been set up to encourage young people to go into business. Alongside Founders Factory, others include SETsquared, UCL’s Hatchery, and Techstars.

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Additionally, 20VC’s Stebbings recently launched Europe’s equivalent of the Thiel Fellowship — a program which gives $200,000 to young people under the age of 22 who want to build innovative startups. Alumnis of the U.S. program include billionaire Lucy Guo to Ethereum co-founder Vitalik Buterin.

Stebbing’s Project Europe, backed by 128 different founders from firms including Klarna, Mistral and Soundcloud, is a fund which will award 200,000 euros ($234,684) to select founders who are 25 years old or younger.

However, the U.K.’s House of Lords’ Communications and Digital Committee warned earlier this year that the U.K. is at risk of becoming an “incubator economy” — as ideation remains strong, but the ability to scale and grow remains weak.

“If we can’t solve our pathways to capital markets and incentivise sovereign IP [intellectual property] to stay here, then we risk losing our best companies to better structured regimes with greater liquidity potential,” Routley said. “The ambition is there, but the ladder is missing a few rungs.”