[HN Gopher] UK outperforms US in creating unicorns from early st...
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UK outperforms US in creating unicorns from early stage VC
investment
Author : mmarian
Score : 52 points
Date : 2025-11-06 20:01 UTC (2 hours ago)
(HTM) web link (www.cityam.com)
(TXT) w3m dump (www.cityam.com)
| fourseventy wrote:
| According to the article in the past decade the UK produced 57
| unicorns, and the US produced 762. I wouldn't really call that
| outperforming.
| daanbread wrote:
| They pretty clearly state their metric for performance is
| "unicorns per $1bn" (3.08 vs 1.22).
|
| They're suggesting dollars invested in UK startups are more
| likely to create a unicorn than those same dollars put into us
| startups, hence higher performance.
| jimnotgym wrote:
| Presumably because VCs in the UK are so much more risk
| averse? They only invest in 'sure things', potentially
| missing out on other opportunities.
| nailer wrote:
| Also if the UK investor says "we'd love to invest, can do
| the whole round, want you to send us your current cap
| table, we need to get the deal done before April because we
| have capital to deploy before end of the current financial
| year" don't actually expect the funds.
| inglor_cz wrote:
| Could you explain this?
| cjbgkagh wrote:
| I assume too good to be true.
|
| I had the misfortune to be pitching to VCs in the UK, the
| money was so expensive that it's just not worth it, much
| better off moving to the US if you can.
| FloorEgg wrote:
| I know nothing about UK investment culture, but I have been
| building startups for 15 years, volunteered for multiple
| accelerators, made angel investments and rubbed shoulders
| with many US VCs.
|
| My impression of the US VC industry, especially near the
| end of the zirp era and even more especially during covid,
| the amount of VC capital being deployed far surpassed the
| number of competent VCs or startup founders.
|
| Many VCs were making decisions based on factors that were
| NOT correlated with future venture success. Many VCs in
| fact probably biased companies away from future success,
| because they didn't understand what they were doing and
| their instincts from prior industries or investment regimes
| were directly the opposite of what was needed for an early
| stage startup.
|
| In other words, there is risk aversion, and there is
| foolishness. I know for a fact there was a lot of
| foolishness going on in us VC investing (I even
| participated in some of it, learned from it, and I know
| better now).
|
| I'm not just talking about VCs throwing money at anyone
| with a pitch deck. I'm talking about VCs having a backwards
| understanding of what makes startups successful and
| actively pressuring startups that could have worked into
| doing the wrong things.
|
| There is a core of US VCs that are the world leaders in
| what they do, exceptionally aware of what makes startups
| successful and have the track record to prove it - this
| minority is overwhelming responsible for the industry's
| ROI. There is also a massive graveyard of fools who tried
| to replicate that success and failed for a variety of
| reasons.
| conductr wrote:
| If they are able to scale at that ratio it will be
| noteworthy. It is quite unlikely though.
| idle_zealot wrote:
| Well, yeah. Presumably the way they achieve a good ratio is
| by being more discerning with their investments. If you try
| to scale that you get the US's numbers as you throw money
| at anyone with a pitch deck.
| wakawaka28 wrote:
| That might be a case of selection bias. The only reason to
| put up with UK regulations and other issues is if you have a
| compelling reason to do so (compared to similar
| opportunities).
| cjbgkagh wrote:
| Quite typically the highest return investments are picked
| first; as such there is a diseconomy of scale, it should be
| of no surprise that the ROI decreases as investment scales.
| Perhaps instead of thinking of it as a sign of efficiency it
| should be thought of as an underdeveloped market with the UK
| foolishly leaving money on the table.
| hshdhdhehd wrote:
| Also it is not measuring average returns per $ but returns
| split by company then a vector operation of ceiling (1bn)
| divided by my 1bn then aggregated.
| aiauthoritydev wrote:
| Thats a dumb metric. It is like saying conditioned on a
| doctor saw you, how many people were saved. You gotta count
| folks who died because they did not see the doctor too.
|
| Some of the unicorns could be simply rent seekers making
| money by colluding with government people. Investors saw them
| sure shot and hence invested. That model is neither scalable
| not healthy.
| impossiblefork wrote:
| Yes. If the UK matched the US per capita it'd be ~285 unicorns,
| so it's actually performing at 37%.
| kazinator wrote:
| But a per capita figure is diluted by how big of a tech
| sector that country/region has relative to the rest of its
| economy. The more people work outside of that sector, the
| lower is any per-capita figure from tech. Fewer lines of code
| written per capita, fewer bugs per capita, ...
|
| The figure per invested dollar is much better: how many
| unicorns emerge per billion of investment money.
|
| Those who chase unicorns are mainly investors (plus people
| who want to join startups that become unicorns). That figure
| is directly relevant to them.
| physicsguy wrote:
| The tech sector in the UK is pretty big but also massively
| finance weighted. And salaries a lot lower than the US so a
| $ investment goes further. At my company a few years ago
| our one developer in Boulder earnt more than our head of
| software in the U.K.
| 0xy wrote:
| Satire?
| BrenBarn wrote:
| I don't really see this as a positive thing.
| anon291 wrote:
| The main difference between the US and the UK is that American
| startups are building platforms for the world, whereas UK ones
| often consume those platforms. The platform holder holds the
| strategic keys. The efficiency of the market system is irrelevant
| to simple dominance. This is the same issue with other startup
| hubs, like Singapore, Bangalore, etc.
| MadDemon wrote:
| Do you have something to back up this claim?
| tjwebbnorfolk wrote:
| UK is desperate to have something going for it right now. Just
| let them have this one.
| Xss3 wrote:
| 2 british blokes in a shed doing what an entire team of corporate
| engineers cant is an incredibly strong part of British culture.
| They strive to be scrappy. They dont like making a show of
| things. They dont like to ask for more.
|
| Essentially they draw a hell of a lot of national pride from this
| 'doing more with less' attribute. It came about out of necessity
| during ww2.
|
| Is it really surprising that this culture produces companies that
| manage to do more with less? No.
|
| Germany has a strong safety and reliable robust engineering
| culture of ensuring things are always done perfectly to spec. Is
| it surprising their companies have a reputation for making
| reliable machines? No.
|
| Does British scrappiness and pride in their modesty mean they're
| somehow better than other cultures that prefer to go all out
| about things? No.
|
| Sometimes you just cannot do something with 2 brits in a shed
| taking pride in their modesty and NEED that american
| exceptionalism and balls to the wall with everything attitude to
| get things done.
|
| Thats one reason that i believe america produces more unicorns at
| a faster rate relative to population than the UK, Americans
| believe in themselves harder and go big or go home more often
| with less reservations.
|
| As an investor it shouldn't make you consider the UK any less
| risky, as Brits may go modest and go home just as often as any
| American company can goes big then home.
| matt-p wrote:
| I'm a brit.
|
| There's more than an element of truth to this, we do not always
| dream big enough or take enough risk. We are efficient and
| frugal sometimes to a fault.
|
| However it's not the whole story, there are actually people who
| want to swing for the fences, but who cannot and ultimately end
| up either scaling back, failing, or moving to the US. There
| isn't good access to early-stage funding here, and there is no
| real ecosystem either.
|
| We have absolutely _obscene_ amounts of untapped potential, it
| 's infuriating.
| neilv wrote:
| > _Essentially they draw a hell of a lot of national pride from
| this 'doing more with less' attribute. It came about out of
| necessity during ww2._
|
| Two of my best success stories are along those lines, and I
| thought might hit favorable "10x" and "startup agility and
| resourcefulness" notes.
|
| But in the US, I think the stories often land with the unspoken
| reaction of, "strange flex, bro: if that company were better,
| it would have raised more, and had rapid growth of headcount,
| on the way to a successful exit."
|
| This might be a good application of LLM to large text corpus:
| label instances of US startup people of the past 2 decades
| (i.e., ZIRP, followed by crypto and AI gold rushes) speaking of
| how much they raised, and also label instances of them speaking
| of how scrappy they were with limited resources. Compare.
| fidotron wrote:
| Yep, as a brit abroad I tend to think the brits end up on the
| side of excessive tightfistedness too often for their own good.
| Their approach also does not scale up well, since they optimize
| at too small a size.
|
| One big upside of UK business culture that I don't see much of
| anywhere else is once your proverbial two guys in a shed are
| making something useful then people do come out of the woodwork
| to help. The US seems to do that through investments, but the
| UK it's often customers deliberately paying more than they
| might strictly have to. I think everyone that has seen success
| of this form has stories of customers showing up and writing
| cheques bigger than the amounts asked for.
| JCM9 wrote:
| The article is a case study in playing with statistics to give
| the message you want. A different, and simpler, way of saying the
| same headline is that it's much harder for ideas to get
| investment in the UK.
|
| While the "unicorns per dollar invested" stat looks good the
| "good ideas killed off because someone didn't invest" stat looks
| really bad.
|
| The US market doesn't pride itself purely on unicorns created,
| but on the fact that it's a vibrant ecosystem that invests in
| ideas even if they might not become a unicorn. That fact seems
| lost on the meaning of the headline.
| Retric wrote:
| If you're investing, this is a solid argument you should
| consider a UK VC over a US one.
|
| Same data, different perspective and probably more the angle
| they were going for. Obviously ROI is ultimately what matters
| but risk tolerance is a thing.
| Capricorn2481 wrote:
| > The US market doesn't pride itself purely on unicorns
| created, but on the fact that it's a vibrant ecosystem that
| invests in ideas even if they might not become a unicorn. That
| fact seems lost on the meaning of the headline
|
| That just seems like spin on what is essentially burning cash.
| I don't think it's a morally superior posture to invest in
| things that fail. I assure you VC's are turning down plenty of
| things because they don't seem like unicorns.
|
| I mean Sequoia invested with SBF while he was playing league of
| legends in his pitch meeting. We're not dealing with geniuses
| here.
| flir wrote:
| UK's financiers have always been risk averse.
| michaelteter wrote:
| Does "unicorn" really mean anything beyond "can play investment
| game"?
|
| It seems like the tech version of the quarterly earnings per
| share game that has ruined Wall Street and publicly traded
| companies for the last 25 years.
| arjie wrote:
| There's this class of article which is just X is the most Y. One
| of the things I like to amuse myself with is to pick a random
| city X and type in "top city for" and see if there's an article
| for it.
|
| e.g. Fremont was the top US city for startups
|
| https://www.mercurynews.com/2012/10/09/fremont-ranked-top-u-...
|
| Appleton, WI is the fifth best place to live in America
|
| https://www.nbc26.com/appleton/study-finds-appleton-is-the-f...
| rvz wrote:
| fake news.
| SunshineTheCat wrote:
| Boasting a stat like who has the most VC backed "unicorns" is
| like ranking cities in a state by how many lottery winners it
| has. Let's see a chart comparing the number of top "bootstrapped"
| businesses and I have a funny feeling the result will be much,
| much different.
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