Wales' tech start-ups 'lack cash and advice to scale up'

Technology start-ups face a lack of relevant funding and advice in Wales when they begin to "scale up" into "large, successful" firms, a business network has said.

Almost 80 tech start-up companies have received £60m from Finance Wales in the past 10 years.

But Cardiff Start, a network with 2,500 members, said support was "often not fit for purpose".

The Welsh Government said it offered a range of "tailored initiatives".

A report by Tech Nation earlier this year said Wales had the fastest growing digital economy outside London.

Finance Wales, the Welsh Government's venture capital body, has awarded £20m entry investments to 78 companies, with a further £40m given as follow-on investment.

Individual funding can range from £1,000 to £5m, via avenues including its Technology Seed Fund and Wales Business Fund.

But Neil Cocker, Cardiff Start co-founder, has called for a greater awareness of how the digital industry operates.

He said tech start-ups usually operate by different economic models than more traditional businesses, and the usual approaches "simply aren't relevant or helpful".

The tech sector in Wales is worth more than £8.5bn to the Welsh economy

"Most of our start-ups never fulfil their potential because of the lack of relevant funding and advice," he said.

"We sometimes even hear how the start-up founder feels they're actually further behind than if they'd spent the time without the support.

"It's important to note that this is not the fault of Wales or of Welsh Government - we don't have the right pool of experience on which to draw.

"But it does point to the fact that Welsh Government should listen more closely to those who are at the coalface, and help them gain access to the people who can really help them."

App developer Stephen Milburn, who helps head Cardiff Start, said tech start-ups were struggling to make their first million once they get off the ground.

App developer Stephen Milburn is part of Cardiff Start, based in Cardiff Bay

He said the Welsh Government needed to take a long-term view when backing companies, because "the value and return ratio is different" compared to "bricks and mortar" businesses.

Both believe Wales could promote itself better to venture capitalists if it "brands" its success stories.

Mr Cocker added: "Scotland are very good at promoting their successes, and everyone in tech knows that Skyscanner and Rockstar Games, for example, are from Scotland. But outside of Wales it is little known that GoCompare was a Welsh start-up."

Steve Smith, Finance Wales' director for technology venture investments, said it had "a dedicated technology investment team who work with technology ventures at a range of growth stages".

"Our portfolio has a number of examples of companies that have progressed from a seed-funded start-up to multi-million pound investment round involving a syndicate of venture capitalists," he said.

He added that the range of funding and infrastructure "has helped tech starts in Wales flourish but also attracted companies and founders to relocate here from across the border".

Ken Skates said the Welsh Government has supported the creation of more than 10,000 jobs in the sector since 2010

Economy Secretary Ken Skates said the tech sector in Wales was growing 32% faster than the economy as a whole, and was worth more than £8.5bn to the Welsh economy, with about 3,500 businesses employing more than 40,000 people.

Mr Skates said the Welsh Government was "proactively supporting innovative businesses through tailored initiatives", such as its Digital Development Fund, and has "actively supported emerging workspaces" including Welsh ICE, TechHub Swansea and Tramshed Tech.

"We recognise that tech companies operate differently and can have different requirements for government support," he said.

"We remain committed to a programme of support that is focused on driving further growth in the sector and ensuring Welsh tech businesses are given every opportunity to thrive."