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Business Comment

Jim Armitage: Britain's short-termers cut and run too soon

Outlook The natural response to Alistair Crane and Jamie True's bumper deal yesterday was to cheer.

Two clever young chaps set up an app design business: one a defector from Nokia, another a serial venture capitalist. Six years on, they sell the company for £40m.

Mr Crane, the 27-year-old programming genius, picks up the lion's share: tens of millions of pounds. Kerching! Good on'em!

But hold on a second.

The gobbling up of Grapple means another promising British tech baby has been taken out before it has even been weaned. Time and again we see this with British tech entrepreneurs: get in, cash out and move on.

Couldn't the duo have continued building their child-business to adulthood, or at least adolescence, themselves?

Mr Crane, who should be congratulated on having the brains and business sense to launch such a successful company, said he sold to Monitise, an £800m company, because of its financial backing and global footprint.

He has made his decision, and hopefully will thrive under Monitise's wing.

But were there no alternative ways to grow without sacrificing control? Finding more angel investors to fund their growth ambitions? Getting more private-equity backing? Teaming up with international partners to achieve that global reach?

Unless we can persuade our young tech entrepreneurs to hold on to their companies and build them for the long term, we are never going to have a British Facebook, Google or Apple.

A seasoned Silicon Valley investor this week said he sees it as a "British disease". The entrepreneurial culture here, he says, is all about "the exit". Short term.

It makes his job harder, because he and many other Valley investors don't bother backing entrepreneurs who dream of exiting before the business has even got started. "I want people who are there for the long term," he says. That's where the really big returns are.

The London Stock Exchange is trying to help, making it easier for young tech businesses to raise equity on its new High-Growth market. This allows firms to float smaller slugs of the company to enable longer-term, private-equity investors and founders to keep their stakes. The Government has also helped with action on tax relief for seed capital investors.

It seems the authorities here "get it". Now we need to encourage entrepreneurs to get it too.