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Julie Meyer: Big corporates should invest in "digital enablers"

by LLB Editor
24th Jun 13 9:40 am

Ariadne Capital Julie Meyer on how to encourage investment in technology start-ups

We’ve asked more than 30 of London’s business leaders how they think Britain can create economic growth, opportunity and innovation. Read the full publication online: Securing Britain’s Future.

Read our interview with Julie Meyer, founder and CEO, Ariadne Capital and founder, Entrepreneur Country.

What’s going on in the market right now is not so much the installation of new technologies and disruptive technologies, but what I refer to as digital enablers: the digital tools that are being deployed across the distribution base of large industry, and transforming industry digitally.

These digital enablers, the tools and companies that can bring in new digital revenues for industry, are like cars that need a highway. They need to find distribution. Big business gives them that highway. That big business highway could be Apple iPhone and Google Android, or it could businesses like catalogue company N Brown, or a gaming company like Paddy Power.

The big piece of the iceberg, the nine tenths of all established industry, is all the stuff that has not yet been transformed by digital business models. Those big corporates need to become enterprise platforms – open to the digital enablers that understand and operate in our digital economy – so the digital enablers can bring in new revenues for them.

That is beginning to happen now. But there is more that needs to be done.

Banks, for example, have masses of customers, but it’s really a question of whether they’re going to allow other new digital enablers in the financial services industry. Those digital enablers could be providing an online money dashboard, or peer-to-peer lending, or different kinds of digitally-applied loans. Banks, I would argue, are going to lose their place, despite all the money that they have, unless they open themselves up to the digital enablers – the people who have created new financial services – and do some interesting corporate deals there.

To encourage more investment in technology start-ups and digital enablers, the government needs to lower the tax burden. There so much cash on these corporate balance sheets. What if they got tax incentives for putting cash into early-stage funds? They might invest in 20 across the country.

Not all big corporates have to invest in these digital start-ups to open themselves up to digital enablers, although that will work for some. Some big corporates may, instead, simply hire the right people who understand how to work with digital enablers. Corporates might then make investments into their own firm to embrace the digital age, or invest externally.

Elsewhere, some government schemes are working to incentivise more investment in technology start-ups – the Enterprise Investment Scheme, for example. When Silicon Valley entrepreneurs come to UK and see the EIS, they think it works beautifully. That reduction of tax is incentivising.

Dropping taxes is key. I’m big believer that it’s our money, and if the government allowed us to keep more then we would choose to do very productive and positive things with it. We’d spend our money on consuming more, we’d more invest more in technology start-ups, some of us would set up our own, those of us with social conscience would give to charity, and so forth.

When corporates feel tax is too high, they start legitimately dodging it. So if the goal is to get corporates to make the biggest contribution to society, to invest in technology and in other economically-beneficial things, drop the tax burden and create tax incentives for investment in technology.

People don’t want to feel like they’re being whacked over the head with a stick. They should be enticed with a carrot.

Key points

  • “Digital enablers” are the technologies that can digitally transform large industry
  • Big corporates should open themselves up to them to find new revenue streams
  • The government should introduce tax incentives to encourage investment in tech start-ups

We’ve asked more than 30 of London’s business leaders how they think Britain can create economic growth, opportunity and innovation. Read the full publication online: Securing Britain’s Future

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