I'm David Merritt and I'm Francine Lakwaw and.
This is in the City, Bloomberg's podcast, connecting you to the Conversations a part of the City.
Of London, and this week, Dave, we talk London Tech.
That's right, it is London Tech Week and we have both been down there at Westminster. I was there on day one. I think you've just got back.
I just got back day two. So on the first day when you were there, and then you have the Prime Minister yep, pretty soon she was around the block. I heard it was quite difficult. I actually could.
Actually we managed to producer. Producer managed to sort of slip me around. I actually had a cue barge. They were having to hand out water because it was so hot, so it was slightly chaotic in there, the big crowd, so Rishi Sunac and then I met with the Mayor
of London City Khan afterwards as well. And also part of the event's kickoff was the announcement of HSBC relaunching the recently acquired ukr SVB, which has now rebranded itself as HSBC Innovation Banking, and later in this episode, on my conversation with the group's boss erin Klattz.
Yeah.
And then the next day they had the opposition leader Cures Darman. He laid out i think for one of the first times, actually his vision for a labor government on how they deal with AI, how they regulate, and how they incentivize tech companies solicit here.
There's going to have to be an overarching regulatory framework of some sort. The government's talking about principles in legislation, which then find themselves in each of the sectors. I think we're going to have something stronger than that. I think foundation AI needs regulation as well, and that requires international leadership as well as leadership here, but also working with businesses, because you need a government that's on the pitch, working with business to say, if there are to be
changes in jobs. Let's say there are job losses, what are we going to do about the workforce.
Yeah, And of course you gave a profit grilling on stage.
He could have had more policy, yeah, but actually his overarching theme was definitely, look, let's treat tech like an industrial plan.
Yeah.
And listening to Sunac, I mean you could, I mean he was clearly making the case that London is this kind of buzzing capital for tech. You know, we're going to try and sort of peel back the layers of reality on that. So we've got in the room with this now in the podcast studio with us now we have of fintech reports at Aisha Ghani iic, you've also been at tech Week this week. What is your impression is all that hype for real?
Well, it's also worth mentioning that at the same time as UK Tech Week, we've also had Viva Tech in Paris right at the same time, at the same time, and they've.
Flowed didn't mention that, did they?
I mean they've flown in Elon Musk. I've got their CEO of sales force. Meanwhile, we're having a lot of policy discussions here. So I think you can see the kind of contrast.
And so must decided to get to Paris not London.
Was he invited to London? This is a question is it just a bigger It feels like a bigger event in Paris because they've been doing it for quite some time, and I think London Tech Week started three or four years ago.
They said that next year they're going to move to Olympia, much bigger. There's going to be lots. I mean, we were trying to organize some of the interviews and it was just chaotic getting up and down into the floors. There's no space for the cameras that and it's clearly completely outgrown that space. So it's going to be bigger and better next year. But we're kind of playing catch up with the French, right.
Yeah, I mean I'd love to see the lineup next year. And we have other similar conferences. I went to IFGS Innovate Finances Global Summer earlier this year and like the headline speaker again was like the Economic Secretary. He basically was telling founders that we are a sovereign nation, we dealt with sbb UK, get on with it, which I thought was quite intriguing. So there's definitely a lot more like policy focus.
So if you look at the UK, are they trying to get more funding than France? I mean again, France has a lot of billionaires and telecoms that have put a lot of weight behind it. Or is the UK trying to regulate AI and really become a tech hub to rival to look value.
I don't think anyone could deny that the UK has slipped behind. And there are competing hubs and there are other exciting places it's changed from the last few years. So it's about I think there's a lot of it is about confidence as well. Everyone I speak to mentions political instability. They're kind of seeing where the chips will fall,
so they're kind of holding on at the moment. I mean, we've seen really high profile CEOs and founders talking about their frustration with the UK at the moment, the revolute founders being the ones that come to mind, saying how the red tape has been so frustrating, dealing with months and months of delays with regards to their emails regarding their UK banking license. So that kind of gives the flavor of the sort of things that they're having to deal with at a granular level.
So one of the things that the Prime Minister said was that Britain's biggest problem is less the kind of capacity of this economy create tech companies, but more just the confidence to sort of celebrate it.
The government can do all these things, but fundamentally it requires the entrepreneurs to just keep going. To be not content with building one hundred million pound business and then the billion pound business, but just to keep growing and that I found in California is very much the attitude. It's just the sky is the limit. Everyone thinks they can create a one hundred billion dollar company and actually, you know, changing that culture is tough for government to do.
But I don't know what you think about that.
Do you agree with that? Is it just about sort of the swagger or the ambition?
Oh, that has so much to do with it. I recently caught up with Tom Blomfield. He was a co founder of Monzo, one of UK's unicorns, and he's now moved to sunny California as a partner at y Combinator, the Accelerator, and this is exactly the point he made.
He's on the streets of San Francisco and he's seeing Driverller's cars and people are people's startups are totally AI driven And he said, like the comparison ten years going in London was that it was really difficult for him as a founder to raise any money.
Yeah, And it was interesting, isn't it. I was sat there listening to the Prime Minister to talk and about Britain as this hub and his focus on cutting regulation and making it easier for people to come in on visas and the reality of what we hear from executives
is very different. And then this political instability question because of course when he took questions from the media, what came up, well, it was the weekend of headlines about Boris Johnson and the honors list and that controversy, and that was what made the news from the summit was his response to now you know, the war of the supposed war of words with Johnson. So yet again he goes down the kind of rabbit hole of politics rather than actually pushing forward with policy. And you can sort
of sense the frustration from the company's present. They want to hear about what we're doing to kind of promote business rather than getting sucked into the Tory psychodrama that we've been in the last few years.
Also, I mean, I look at it, I kind of put myself in a founder's shoes, and if you're just starting out right now, you need to be hiring the top talent, you need to secure the R and D tax credit, you need to deal with licensing. How do you get that through when they're regulators dealing with a backlog.
Those are the kind of questions that founders are raising, and some of these founders, you know, they are obsessed with looking at these headlines and trade deals for example, and they thought maybe they'll be like a little bit of hope there.
Which is to make things easier with the EU, because.
They were saying for months and months, well for years, it seems as though we can't even speak about Rexit.
And one of the big problems is obviously as everyone said about visas. And you know we've heard Sunak saying that the system is perfect. But the Mayor of London so did it calm when he spoke to me, said there's still a lot of work to do to ensure that we can attract the right sort of talent.
We can't be complacent and we've going to recognize is yes, it's wonderful. Some of the world's best companies choose to London as the European headquarters. They expand in a London. But we've got to recognize an out doorstep is a market more than five hundred million people. The European Union, even the prime ministers are recognizes you can't turn your back on the European Union. So I welcome the fact that prominence is here today, the Chancelly is here today.
So the good news to those watching this from overseas is you've got a government that understands some of these issues. The only problem is that prominence is too weak to take them on and address them.
But I think that is the concern that First, there is a skill shortage, so if you're a founder, you don't necessarily know if you find the right people to come in and fulfill the jobs that you need them to. And then second, because the Tories are doing so badly in the polls, are they just wanting to know more about what labor government would look like and we're still
thin on details. I don't know whether because the election is still like sixteen seventeen months away or because they haven't really of framework on it yet.
I think it's both. But their immediate concern is we can't hire the best talent. What are we meant to do? How we even meant to progress as a company. One founder I spoke to he was really frustrated and he said the government needs to wake up. He's spent upwards of like ten k trying to hire top engineers from Europe and wait, no exactly and has already been waiting.
Much This has come up so many times I said, I mean and again keep going back to this sort of distance between the reality and what's soon. Ac said on stage, he said, We've got this fantastic visa system now to bring in talent.
Whether it's the new scale up visa that I introduced as Chancellor for companies who are scaling up to able to get the talent they need, whether it's our Innovative Founder visa, which is globally extremely competitive, or the High Potential Individual visa that I created, which essentially says, if you graduated from a global top fifty university, just come to the UK. You don't need a job offer. We just want to make sure that you can speak English and that you have a certain amount of money to
support yourself. Otherwise, we want you here because we think it will be additive to our economy. That's a massive We're open for business sign to the world's most talented, and I think that's important.
No one seemed to have heard of that as well, So no one knows about these schemes, and the ones that are in place seem to be not fit for purpose at least in terms of what the founders need and want. And yet the prime Minister doesn't agree exactly.
I'm going to get a bit nerdy here, but like, of course, we know that the government pulled back their funding of TechNation, which dealt with a lot of these global tech visas, and then we had a bit of stalemach because we didn't know who would be responsible in issuing these tech visas anymore. So that happened earlier this year.
So I show what is your outlook for Lumber's tech scene.
I mean, London is not dead, that's key, and I do think we need to just be a bit more measured and I think some of it is a bit scare mongering, but at the same time we have to recognize that it is just becoming more difficult and there's real competition, and you have people like Macron literally rolling out the red carpet for founders to be at their Eliz Palace and then you've got these founders, they have
photos with him and they go to US investors. And then on the other side, when the US investors come to the UK and ask founders, well, how are you going to grow, where are you going to expand what's your passporting like have you got a foot in Europe? And they can't really respond then obviously there are challenges. There are real bureaucratic challenges that I think it totally depends on where you are in the ecosystem.
But does that matter. We're going to regulate AI worldwide. The UK is.
That's the big pitch at the moment, right, that Britain's going to take some role. And you know, saying this with the deep mind guy there who reports say, actually spending increasing amounts of time in the United States, right, rather than but putting that aside, cam Briton really be a leader kind of marshaling all of the different arms races that are going on an AI around the world. It feels like that stretch incredibility.
We're already playing catch up though that Europe and the US have been having these conversations for a while. They've already joined up in terms of research with regards to AI and the public good. They've already been discussing at meetings. I mean, the UK wants to host this global summit when in the autumn, and it's a bit late.
I should thank you so much, thank you, Dave. The other questions, of course, how do you get funding? So you need a strong bank that will lend to some of these startups. And you had a great conversation with the newly minted chief executive of the former SVB UK.
That's right. Erin Platt used to run SVB UK. Remember the collapse of Silicon Valley Bank. That unit was brought by HSBC for a pound was rescued. She is now the CEO of the newly minted HSBC Innovation Banking and they announced the new name for that unit at Tech Week yesterday. She stood up and asked the first question to Rishis. Soon that she came into Bloomberg and we
sat down and talked I think the question. Remember when we did the podcast around the claps so SVB we talked about what it would mean for the startup scene in the UK. Would that kind of ecosystem collapse? What would HSBC even be able to replicate that kind of culture because it comes from a very different sort of place that SVP did. We're very delighted to have Erin plattz the chief executive of the newly minted HSBC Innovation Banking UK. Welcome to the podcast.
Erin, thanks so much for having me.
Can we believe the hype of London tech week. Yeah.
So I've been here now for over a decade and a half working with innovation businesses, so tech companies, life sciences, whether that be early stage startups, late stage public and private corporates, and it is astonishing to see how far we've come in the next in the last decade and a half. And I do think that we are at a really pivotal moment. The market, of course, is a lot different than it was in twenty twenty one and twenty twenty two. There is some I would say systemic
change is happening. Raising money is harder, the public markets remain closed, inflation remains sticky, so there's a lot to contend with. But if you take a step back and you look at the foundations that the UK has in terms of innovation, I'm really optimistic.
Right.
We've got great universities, we've got fantastic talent, we've got largely friendly regulation. We're closer than we've ever been to unlocking pension capital. I think we're a hub right still. For the US to come in and Andresen horowitz announcement that their first international office is in London is a big, big deal. So you put all of that together, yes,
the macro economic situation remains difficult. The innovation economy backdrop is challenging the pockets, but for me, the next five to ten years will be hugely exciting.
When SVB was bought SBBUK has brought HSBC. One of the questions we asked, in fact we talked about it on this podcast back at the time, was will there be some sort of cultural loss there?
You know?
SVB was kind of funky, right, people talked about the parties. It was a bit of a badge of honor if you were a founder to have an SVB account. Do you think HSBC Innovation Banking is going to step into that place easily that was vacated by SBB and be the bank of choice for startups in Britain.
Taking a step back, So what's changed and what hasn't changed? I think that's a really important perspective to keep front of mind. So our name has changed, and actually we spent a huge amount of time with a community, speaking to entrepreneurs at every stage, speaking to investors, and not just in the UK, but in the US and Israel on the continent to make sure that this new brand name would resonate and what we found is actually the client base was really very happy to have HSBC feature
front and center. It's been a tremendous three months in the banking sector and HSBC has always been a stalwart of strength, right, plus than the innovation component we need to retain and again what hasn't changed, Well, we're really fortunate that our whole entire sub UK team has remained together, continuing to service our clients in the same ways before those relationships, continuity, consistency and market so they're working with the same people, you know, same mobile phone numbers, right,
So that feels really really familiar. But then I think the trick is, and what we're working really hard to do is how do we keep what was great about svb UK and then bring together what's great about HSBC the breadth of the platform, the sophistication of the products, the global reach. So we need to continue you do, work really really hard to make sure that we're showing up externally in the same way. But the feedback, you know,
will be led by the feedback from our clients. And it's been great and we've seen more demand actually in the last ninety days than I expected.
Yeah, it was it was certainly there was, as I said, a real buzz in the room there. I just wanted to sort of sense check there a little bit more as well. You talk to a lot of these founders and you know, one of the things is the relationships you've got with everybody. Publicly, a lot of the more prominent founders and entrepreneurs have been pretty critical about the state of the market in Britain. For many reasons, companies and startups don't want to list their shares in London
and increasing and looking overseas. I mean, just is it really is the hype that we saw yesterday? Is it for real? Or really? Has Britain got some structural problems that are making it harder for people to found and grow businesses here.
When I take a step back and I think about the UK, right, we are still the third largest innovation economy in the world. Fintech continues to be world class, world leading here and in London. There's a lot to be proud of and there is a lot to do to continue to make this a top innovation destination and hopefully continue to climb the ranks. You are absolutely right the reforms needed to make the London Stock Exchange competitive with the US markets. We are on that journey and
we're not remotely done. And I know Julia Hugget is a huge proponent of trying to drive change and really listen to entrepreneurs and investors to figure out what do we need to do to make the London change.
On the you mentioned pension funds.
On liquidity, there's culture, there's media, there's I mean a ton to unpick and I think with that, it's you know, are we going to see the London Stock Exchange be as competitive with the US markets in the next twelve month? It's probably not.
Let's be realistic.
Yeah, okay, I agree. No, should we continue to aspire and drive change over the next three to five years. Absolutely, I'm really thoughtful. As an ecosystem, let's not perpetuate historic perhaps challenges. You know, we often hear, well, you know, the ambition here isn't isn't as big as the US. I do not buy into that at all.
Think says we're talking ourselves.
Down a bit.
Yeah, I mean we have.
We are creating global category leaders in almost every single sub sector. Let's celebrate that. I'm not saying it's perfect, but there is a lot to be proud of.
What's the toughest challenge for these startups or is it interest rates? Is it raising capital? Is it getting the talent to come or to find the talent around the world. What's the biggest hurdle to success.
I think there's often there's kind of top three challenges that regardless of the year they start, they switch ranking, but it's always access to capital, access to talent, and access to customers, usually on an international basis. And again this year, access to capital has really stayed number one. As venture capital and private equity funds are there's still a lot of price discovery going on as LPs are
looking at their allocations in this asset class. I think fundraising is going to continue to be difficult for the next probably twelve months plus. That's not to say that money is not flowing. That's not to say that incredible companies aren't raising money, but it's just it's tough. It's tough out there, so I think that's still number one.
Access to talent is always an issue, and there's a really interesting discussions thinking about the skills and talent that we need to foster here to be relevant for the next five to ten years. As the types of companies that are being started in scale tiers is evolving.
Just looking at the rest of Europe. You've got base, you've got staff here in the UK and in the Nordic region. Yes, not currently in continental Europe? Is that going to change? I mean we are obsessed on this podcast about the rise of Paris, for instance, as a financial rival to London and post Brexit, how financial services are being distributed around the rest of the EU. And you can say the same for some tech investment as well, right,
I mean, are you looking at places like Paris or Berlin? Yeah?
So you know.
Noel Quinn, the group CEO, has been really clear he wants to take this business and brand global. The ambition is where are there are pockets of innovation, capital and talent. We really want to be serving our clients there right wherever there's pull into these ecosystems. In the previous company, I was running all of UK and EMIA. We had offices dotted around Europe and there's a lot of amazing activity.
So we're looking at that really closely with the leaders that cover those geographies and I wouldn't be surprised over time if we If you see HSBC Innovation Banking expanding there.
So it's a growth story for HSBC Innovation Banking. And you know, looking back at the last few months, do you think this kind of matter? I mean, obviously you anyone could have foreseen this a year ago with VB. But going back to what you said at the beginning about merging that kind of entrepreneurial, that nimbleness, that that culture of supporting smaller companies with the with the heft of HSBC, does this set you up for more growth than perhaps under the previous culture?
You know, I yeah, I think so actually, And it's I'm pausing because it's having been with the previous company for almost twenty years. You know, you don't you know, you don't. A didn't expect this to happen, but B didn't expect it to land in such a positive place, if I'm you know, being honest. But since the since the Monday post acquisition, and you know, we've been really,
really fortunate. And we had a town hall on the Tuesday in March and one of the messages I gave to my team and it's more true today than it was even then, is Listen, we had a vision to support innovation businesses across the continent, full transactional banking capabilities, full private banking, wealth capabilities, full investment banking capabilities, everywhere they wanted to go. But it was going to take us like five to seven years to build that out
from the ground up. In the old SVB UK business, HSBC has all of those capabilities, they have huge depth.
So what I said to.
The team on that Tuesday morning is we did not expect to get here in this way, but our twenty thirty strategy just arrived. So there's a lot to be optimistic about. No, it's going to be continue to be hard work to build out the proposition, to make sure it's exactly what our founders and entreprens need at every stage of growth and every subsector. But it is, you know, there's a clear path to building what is I think the most unique platform now for innovation businesses in the world.
Aaron Platz, thank you so much, Thank you thanks for listening to this week's in the City. We will be back next.
Week, but in the meantime, if you like our show, please head on over to Apple Podcasts or wherever you listen to podcasts and rate, review and subscribe.
This episode was hosted by Me David.
Merritt and Me Francinlakwa.
It was produced by Samasati and Moses.
Andam additional editing by Blake Maples. Special thanks to Aisha Gani, Aaron Platts, and Sylvia Klamaki.