Now – What has Changed since 2002
In Part 1, I listed what had endured and worked since 2002 when I started my accounting business for tech companies.
In Part 2, I cover what has changed, which is a much broader subject.
3 Major Changes
Technological change
The internet, mobile phones, and more recently robotics and AI have changed and are changing our world in ways that would have seemed like something from a science fiction novel in 2002.
The internet and cloud accounting has transformed our work so that now I can manage multiple clients’ finance functions from my office in my back garden, check in on them from my mobile phone on the move and have staff and subcontractors anywhere in the country. By allowing us to get data and communicate much more easily, it means that we can concentrate much more on the present and the future than the historic data that accounting used to focus on
The rise of the Entrepreneurial Economy
Running your own business has become much more common since 2002. Technological changes have helped this but there has also been a cultural change. As “jobs for life” have disappeared, setting up your own business has become an obvious step for many.
We now have a much more supportive ecosystem for doing this, in which previously successful entrepreneurs are acting as business angels and mentors, teaching what they have learnt to the next generation.
Our universities especially now have a much more established infrastructure and support network for helping new start-ups and spinouts.
Purpose Driven Businesses
In 2002, we were still heavily influenced by the neoliberalism of Thatcher and Reagan, and the objective was to make as much money as possible.
Today, young people in particular care about more than making as much money/profit as possible: they value making a contribution to society and working for “purpose driven” companies. The outlook is much more altruistic and collaborative, resulting in the emergence of B Corps and the Better Business Act.
There is a recognition that technological advances are most often not completely new but come from combining the ideas of people from diverse backgrounds with different perspectives and ideas for the good of all.
3 Seismic Events
The Banking Crash
Prior to the banking crash in 2008, banks like RBS and the Bank of Scotland were lending to tech companies through the Small Firms Loans Guarantee Scheme almost like quasi equity, financing R&D activities. After this, tech companies struggled to borrow money.
It created a disillusionment with free market economics that continues today especially as climate change has become more of an issue.
Brexit
The Brexit vote in 2016 could have been much worse. One of our greatest strengths is that our universities attract the best overseas students, many of whom stay and form tech startups after completing their studies. Despite the Brexit vote, in Scotland they have been made to feel welcome still.
There could have been a “Brexit dividend” from removing EU State Aid restrictions on EIS and R&D tax credits but other than the SEIS limit being raised, these have yet to happen. SEIS is still restricted by de minimis grants received by companies and R&D tax credits have become less rather than more generous.
Covid
The Covid pandemic in 2020 could have been disastrous for Scottish tech companies but they were well protected by the Furlough scheme and by measures such as the Scottish Enterprise Early Stage Growth Challenge Fund.
Some start-ups arguably came out of it better as they now have flexible working and can thus source staff from further afield, saving on office costs.
Since Covid, a thriving technology sector is seen as even more vital for the Scottish economy.
3 Suggestions for Improvement
Help for Founders
The measures that have worked best since 2002 have been aimed at Investors – EIS and the Co-Investment Scheme.
We need to do more to help founders – they are still working very long hours and are bootstrapping/under-funded. It is still hard to raise investment, and applying for grants is as onerous and bureaucratic as it ever was despite Brexit.
We also need to change the response to fraud recently uncovered in R&D tax credits, which skews the benefit towards larger rather than small companies. We have to preserve the stimulus that they give to tech start-ups, so that they are not penalised for the misdeeds of unscrupulous advisors.
Connecting up
Glasgow has a really thriving tech sector now but Glasgow and Edinburgh still don’t really mix despite being only 40 miles apart.
Scottish tech companies need better links to London investors too.
Climate Tech/Net Zero
Tech start-ups care about climate change and net zero but they need help to do what they need to – grant assistance for the cost and help from experts so that they can spare the time needed.
There is no recognised scheme for them to follow – B Corp is great but too onerous for a tech start-up that is concentrating their time on raising investment and surviving.
There has been much help for software and SAAS businesses but we need a similar focus on climate tech.
Summary
In 2002, I could never have envisaged being connected to all of my clients’ systems through my mobile phone, having an AI assistant to take notes of video calls, going to visit clients at the National Robotarium and living through a global pandemic.
I wonder what changes we will see by 2044?
