Startups Weekly Round Up: 13 March

Welcome to Startups’ Weekly Round Up, where we bring you the latest headlines affecting UK SMEs.

HSBC rescue salvages Silicon Valley Bank UK collapse

After a frantic weekend of activity following the dramatic collapse of Silicon Valley Bank on Friday, HSBC has stepped forward to rescue SVB’s UK arm, Silicon Valley Bank UK (SVBUK).

Amid the the biggest global bank failure since the financial crisis of 2008, an estimated 3,500 tech startups who banked with SVB’s UK arm had been in limbo over whether they will be able to pay their employees and suppliers when the markets open today. Over the weekend, UK chancellor Jeremy Hunt pledged to prepare a cash lifeline for all the businesses affected, but the HSBC purchase (at a nominal value of £1) means that deposits will remain protected and the tremors for the UK startup sector may just be minimised.

The UK government had also contacted numerous UK banks and potential bidders to find an emergency buyer, before the HSBC deal was agreed. Late on Sunday evening, Bank of London confirmed it had submitted a formal takeover offer. Barclays, which was awarded Tech Nation’s funding in January, was apparently also in the running.

We’ll be bringing you more information on this developing new story as it appears. Keep an eye on the Startups website for updates.

Some stats to start up your week

• Women across the UK are able to save 34.5% less than their male counterparts, when considering both ISA value and pension savings
• 95% of SMEs are overlooking obvious cost savings, with the most neglected being water bills
• 60% of customers prefer to use WhatsApp for support but only 31% of customer service operatives currently use it
• Only 26% of the technology workforce are women and only 3% of CTOs or technical director roles are filled by women

11 Downing Street and the UK economy: what should startups know?

🌱 What do businesses want from the Budget? → 25% of UK businesses say they’re unable to obtain necessary goods needed to operate, and 23% of all adults are financially vulnerable. Businesses tell Startups they want essential support from the government in the lead up to chancellor Jeremy Hunt’s Spring Statement on March 15.

The chancellor is not expected to announce tax cuts, despite pressure from Tory MPs and the International Monetary Fund predicting poor economic performance for the UK in 2023 due to fiscal and monetary tightening. SMEs will therefore be looking for measures to reinvigorate the economy.

🛍️ Short-lived business stories → 6,928 businesses were launched and dissolved in 2022, according to research conducted by Real Business Rescue. On average, dissolved companies operated for just 164 days and 22% of these businesses were London-based. The hardest-hit sector were online retail stores, followed by buying and holding property, and hairdressing and other beauty treatments. Birmingham was the second worst-hit area for new businesses, followed by Cardiff and Manchester.

🤖 Preparing for the future with AI → London leads the way as the world’s most AI-driven city, having 2,645 AI events on offer. London, Manchester, and Jakarta are the forefront of AI education with up to 29 AI-specific university courses to choose from. These insights were the result of Business Name Generator research which looked at 50 cities leading the way for AI development and implementation. Metrics included AI venture capital investment, events, career opportunities, salaries, and education options.

Donelan and data protection

The Data Protection and Digital Information Bill was introduced by Technology Secretary Michelle Donelan last week in a bid to simplify the existing GDPR law that governs data protection. The government claimesit will save the UK economy more than £4 billion over the next 10 years and ensure that privacy and data protection are securely protected.

Data-driven trade generated 85% of the UK’s total service exports and contributed an estimated £259 billion for the economy in 2021. The bill seeks to reduce the amount of paperwork organisations need to complete to demonstrate further compliance and provide organisations with greater confidence that they can process personal data without consent.

Importantly, the Bill also seeks to increase business confidence in AI technologies by clarifying the circumstances when robust safeguards apply to automated decision making.

Donelan said: “Co-designed with business from the start, this new Bill ensures that a vitally important data protection regime is tailored to the UK’s own needs and our customs.Our system will be easier to understand, easier to comply with, and take advantage of the many opportunities of post-Brexit Britain.”

Graduate salary expectations rising faster than SMEs can afford

Graduate workers expect to earn over £5,000 more than the average starting salary, according to research by Startups. Gen Z wage expectations are rapidly outpacing the market average, as the rising cost of living makes starting salaries untenable for graduate workers. The average wage for a full-time worker who graduated in 2019-20 is £25,000 against the average graduate expected salary of £30,244.

This follows an increase in the number of young people choosing to attend university. As salary expectations fail to be met, university leavers are increasingly questioning whether a degree is worth the investment. Instead, alternative career paths like apprenticeships are becoming more enticing to younger people who are looking to launch their career.