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Concerns over a lack of entrepreneurial ambition in the UK have led some venture capitalists to question the role of risk-averse parents and an expensive education system in disenfranchising Britain’s young people from becoming founders.
British Business Secretary Peter Kyle said last month that British university students have less ambition to start their own businesses than their American counterparts.
“In the UK, if you go to a group of undergraduates, how big does that group have to be before you find someone who says they chose to go to university because they wanted to be a founder?” Kyle said at an event hosted by AI chip maker Nvidia in London.
“There’s just no entrepreneurial spirit, no drive, no drive,” Kyle added.
Harry Stebbings, founder of 20VC, which manages a $650m fund, said parents are one of the main barriers young people in the UK face when trying to enter entrepreneurship.
“Parents are a big problem. Parents screw you over,” Stebbings said in an interview on CNBC Make It. “In the UK, parents are essentially risk-off, not risk-on. So they say, ‘Hey, get this job. Hey, I went to university. I paid for your university. Hey, I’ll pay for this. Get that job.'”
“In fact, in the U.S., it’s a lot more of, ‘Let’s start a business. Give it a try. Join a startup.'” The idea of risk and career is very different, and I think that’s a completely different factor than how kids start, he added.
Stebbings’ comments are part of a wider debate about whether the UK is fostering a culture of risk aversion. Tom Wallace-Smith, a Forbes 30 Under 30 founder who launched fusion startup Astral Systems in 2021, previously told CNBC Make It that entrepreneurship feels out of reach for most people in the UK.
Wallace-Smith said when he was completing his PhD at the University of Bristol, he didn’t even know entrepreneurship was a viable career path and expected he would end up working in academia or in business.
He argued that while the UK has no shortage of successful entrepreneurs, the government and media could do a “better job of telling founders’ stories” and increasing their exposure to the start-up environment.
“They (young people) still want to go and work at Jane Street. They still want to go and work at Goldman. They still want to go and work at McKinsey. It’s amazing to me. We don’t have the same entrepreneurial ambitions from the beginning,” Stebbings said.
Entrepreneurship is not “financially stable”
Dama Sathianathan, senior partner at London-based venture capital firm Bethnal Green Ventures, agreed that parents tend to be more risk-averse in the UK, but explained that this was likely because entrepreneurship was seen as a financially unstable path.
“It’s not really injected, it’s not built into the whole academic curriculum…People are choosing to pay incredible fees just because they want to give their kids a better chance at school and ultimately college. It’s kind of a traditional route for people, and it’s very expensive if you think about it,” Sathianathan said in an interview on CNBC Make It.
Tuition fees at private schools in England rose by an average of 22.6% in January after the government introduced VAT, according to the Independent Schools Council (ISC). The average day school term fee in January was £7,382 ($9,799) including 20% VAT, compared to £6,021 last year, according to ISC.
Meanwhile, university tuition fees will rise for the first time in eight years in 2025, with the maximum annual fee set to rise by £285 next year to £9,535, an increase of 3.1%.
University fees tend to be much higher in the US, but salaries also tend to be higher, so successful graduates are likely to take more risks, such as starting their own businesses, compared to UK graduates.
A survey conducted in March by the Federation of Small Businesses (FSB) and Simply Business found that nearly 60% of young people in the UK are interested in starting their own business, but cited a number of obstacles to doing so.
Of the 2,079 people aged 18 to 34 surveyed in the UK, only 16% had actually started their own business, with most saying a lack of formal business education was a barrier.
With young people and their parents absorbing high educational costs, pursuing an entrepreneurial path is unlikely to yield a worthwhile return.
“Risk appetite is really about, ‘Do I have a chance to be financially stable in a cost-of-living crisis? Entrepreneurship doesn’t always work out, so when it doesn’t work out, can I actually move on?'” Satyanathan added.
